The Tesla crash may just be getting commenced.
At least which’s what JPMorgan Chase thinks. The Wall Street firm dramatically slashed its cost target on Elon Musk’s car company on Monday, causing Tesla shares to briefly tumble.
In a critical research report, JPMorgan analyst Ryan Brinkman wrote which the idea’s “premature” to value Tesla based on a go-private deal which may or may not ever happen.
Musk tweeted on August 7 which funding for a takeover at $420 a share “has been secured.” JPMorgan believes which recent events show which funding has not been secured — “nor was there any formal proposal.”
By valuing Tesla on “fundamentals alone,” the stock should sink to $195 by December, Brinkman wrote. which’s 35% below current levels.
the idea’s a stunning reversal. JPMorgan set its previous cost target of $308 on August 8 based on Musk’s optimism about a go-private deal.
JPMorgan noted which Musk’s own statements create doubt about how close Tesla is actually to reaching a go-private deal financed by Saudi Arabia’s sovereign wealth fund.
In a blog post last week, Musk wrote which “the idea was just a matter of getting the process moving” with the Saudis.
Those comments suggest which while a deal is actually “clearly possible,” the process is actually “much less developed than we had earlier presumed,” JPMorgan wrote.
Tesla’s wild ride
Musk’s tweet set in motion a strange series of events for Tesla. The stock spiked as high as $387.46 — as well as then plunged. The SEC reportedly launched an investigation into Musk’s statements. as well as Musk gave a tearful interview to The brand new York Times describing 0-hour work weeks as well as his use of Ambien to sleep.
As much as a quarter of Tesla’s market value has vanished since Musk’s initial tweet about going private. Investors are voicing skepticism about the electric car maker’s ability to make Great on Musk’s proposal — nevertheless they’re also worried about Musk in general.
“Investors are likely most concerned about Musk’s overall mindset as well as burn out in addition to the use of Ambien as well as possibly some other drugs,” analyst Gene Munster wrote to clients on Friday.
Even Arianna Huffington penned an open letter urging the Tesla CEO to slow down. Musk responded — in a 2:30 a.m. PT tweet — by saying slowing down is actually not an option.
“Ford & Tesla are the only 2 American car companies to avoid bankruptcy. I just got home coming from the factory,” Musk tweeted.
Tesla has repeatedly proved its doubters wrong. Since going public in 2010, Tesla has revolutionized the auto industry as well as accelerated the adoption of electric cars. While the company has struggled to turn a profit, its share cost has skyrocketed. right now valued at $52 billion, Tesla is actually worth more than either Ford ( or )General Motors (. )
nevertheless Tesla’s goal of rapidly building affordable cars for mass markets has proven difficult. The company has been forced to raise money as well as take on vast amounts of debt while attempting to meet aggressive goals.
Tesla’s expansion into high-volume segments “seems fraught with greater risk,” JPMorgan wrote.
sy88pgw (brand new York) First published August 20, 2018: 10:45 AM ET