Tesla shares fall for a fifth straight session on Tuesday, stock could be worth only $10, Morgan Stanley’s worst-case scenario shows

May 22, 2019 9:04 am

According to a recent investor note by Morgan Stanley, if Tesla Inc’s (TSLA) share price continues to drop, this increases the chance of a sell-off in the upcoming years. In the brokerage firm’s worst-case scenario, Tesla’s stock could now be worth just $10.

At the same time, Morgan Stanley maintained its “Equal-Weight” rating on the shares.

Tesla shares closed lower for a fifth consecutive trading session on NASDAQ on Tuesday. It has been the longest string of losses since mid-December 2018. The stock edged down 0.14% ($0.28) to $205.08, after touching an intraday high at $207.36 and an intraday low at $196.12.

Shares of Tesla Inc have retreated 38.38% so far in 2019 compared with a 17.71% gain for the benchmark index, Nasdaq 100 (NDX).

In 2018, Tesla’s stock went up 6.89%, thus, it outperformed the Nasdaq 100, which registered a 1.04% loss.

According to Morgan Stanley analyst Adam Jonas, the electric car maker’s rising debt as well as geopolitical exposure, including the risk of decreasing demand for its vehicles in China, has justified a reduction in his “bear-case” stock valuation to $10 from $97 previously.

The analyst’s “bull-case” valuation for Tesla stands at $391 per share, while his main price target on the stock has been maintained at $230.

“We believe as Tesla’s share price declines, the likelihood of the company potentially seeking alternatives from strategic/industrial/financial partners rises,” Morgan Stanley analysts wrote in a client note, cited by Reuters.

“Based on our discussions with auto companies, suppliers, and technology firms, Tesla’s strategic value and technical competency in both hardware and software remains extremely high if not in a league of its own,” they also noted.

According to CNN Money, the 29 analysts, offering 12-month forecasts regarding Tesla Inc’s stock price, have a median target of $271.00, with a high estimate of $530.00 and a low estimate of $150.00. The median estimate represents a 32.14% upside compared to the closing price of $205.08 on May 21st.

The same media also reported that 10 out of 32 surveyed investment analysts had rated Tesla Inc’s stock as “Buy”, while 9 – as “Hold”. On the other hand, other 9 analysts had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Tesla Inc (TSLA) are presented as follows:

Central Pivot Point – $218.15
R1 – $227.38
R2 – $243.73
R3 – $252.96
R4 – $262.19

S1 – $201.80
S2 – $192.57
S3 – $176.22
S4 – $159.87

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