Tesla (TSLA) once could do no wrong. But once-bullish analysts are starting to get less optimistic about the stock.
Getty Images Case in point: Baird analysts Ben Kallo and Tyler Frank downgraded Tesla’s shares to Neutral from Outperform, causing shares to fall 1.9% to $189.38 today, its second day of declines. Kallo and Frank explain why they made the change:
Significant price appreciation likely limits upside in the near term – stock price reflects near flawless execution. Since our initiation report, TSLA has
significantly outperformed the market. We attribute the rise to the successful introduction of the Model S, breakthrough battery technology, and establishment
of a cutting-edge brand. However, TSLA has several significant milestones over the next 18 months including continued production ramp and the introduction of the Model X. We believe solid execution on both of these fronts is already priced into the stock, and any hiccups in execution present stock price risk in the near to intermediate term.
Also worrisome: The shift in investor sentiment towards Tesla’s stock. Kallo and Frank write:
Recent conversations with investors have shifted to neutral/slightly negative as investors believe the stock is becoming fairly valued. This change in investor sentiment can be seen in the increase in short interest which ticked up from ~18.6M shares/15.7% of shares outstanding on May 31, to 21.5M shares/17.8% of shares outstanding on August 30.
That shift in sentiment, however, has yet to bee seen in relation to other automakers. General Motors (GM), for instance, has dropped for six straight days.
GM is off 0.7% today, while Ford Motor (F) has fallen 0.8% to $17.05 and Toyota Motor (TM) has dipped 0.3% to $126.99.
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