Shares of Tesla dropped from record highs on Tuesday after an expert cautioned that the electric car maker might take longer than anticipated to become profitable.
Jefferies expert Philippe Houchois introduced coverage of Tesla with an “underperform” rating, helping send out shares of the business headed by Elon Musk down 2.17 percent to $376.74 after closing at a record high the day previously.
“Accomplishments to-date and vision are impressive, however we do not think Tesla’s vertically integrated company model can be scaled up as profitably and quickly as consensus thinks and appraisal multiples suggest,” Houchois alerted in a research note.
Houchois’ $280 price target was well less than the median analyst cost target of $337.50, according to Thomson Reuters.
Musk is depending on the recently released Model 3, Tesla’s least costly car, to make the Palo Alto, California company profitable and develop it as the leading electric automaker ahead of BMW, General Motors and other long-established automakers.
Wall Street’s confidence in Elon Musk has actually sent Tesla’s stock up 83 percent during the last year to record highs.
Skeptics say the automaker’s aggressive production targets are unrealistic, that Musk is burning through money too quickly and that the company’s electric cars will be surpassed by bigger automakers.
Eight experts recommend buying Tesla’s stock, while another eight suggest selling, and eight others have neutral scores, according to Thomson Reuters. That makes the automaker among the 10 most poorly-rated stocks in the Nasdaq 100 index.