After nearly triple the number of shares during the year, Tesla’s feast briefly ended. Tesla’s shares closed down 4.98 per cent and 6.35 per cent, respectively, on July 23and 24, a cumulative drop of more than 11 per cent, which has certainly poured cold water on investors addicted to the Tesla mania.
Tesla’s share price has soared so far this year, before two days of losses, which have risen 280 percent.
After Wednesday’s U.S. stock market, Tesla also released a second-quarter report that exceeded market expectations, showing that for the first time, the company posted four consecutive quarters of earnings and won the “ticket” to the S.P. 500.
But it was at a time when the situation was so good that share prices should have continued to rise that Tesla was quickly “swept” by the chairman of the Securities and Exchange Commission and analysts, and then closed in.
“Short-term trading is more risky than long-term investments, so I do worry,” SEC Chairman Jay Clayton said of retail investors. Although he did not name a specific individual, the answer was immediately behind the question of whether the recent stunning rebound in stocks such as Tesla should be alarming.
In addition, after the positive earnings report, Barclays automotive analyst Brian Johnson immediately “reversed the flow” warning that Tesla is unlikely to reach its delivery target of 500,000 vehicles by 2020, and that the share price could start to reverse in the fourth quarter, with a target price of $300, down more than 80 percent from Tesla’s closing price on Wednesday.
It’s worth noting that Barclays’s short-slinging effect was immediate, and Tesla’s share price turned upside down.
In a rare move, JPMorgan Chase, like Barclays, gave a lower target price of $325 and reiterated its sell-down rating. In the investment bank’s view, Tesla’s share price is still highly overvalued, as evidenced by the combined market capitalisation of auto industry leaders Toyota and Volkswagen, which are lower than Tesla’s.
Pierre Ferragu, an analyst at New Street, said Tesla’s pace of positive growth and gross margin increases would slow, with “limited short-term share price catalysts.” As a result, he downgraded the rating from “buy” to “neutral” with a target price of $1,500.
But investment banks Bernstein and Goldman Sachs have both maintained a neutral rating on Tesla, with target prices of $900 and $1,475, respectively.
Bernstein said it was difficult to short Tesla without a clear catalyst, so he chose to raise its target price.