Tesla shares fall for a third straight session on Tuesday, Barclays cuts price target on the stock, says bullish case undermined

Yesterday Barclays revised down its price target on Tesla Inc (TSLA) from $210 to $192, citing the US electric car makers recent strategic decisions, which undermined the firms bullish case.

The reasons behind Barclays downward revision include the sooner-than-anticipated launch of Tesla’s long-awaited $35 000 Model 3 sedan as well as the decision to shut down the majority of its stores.

Tesla shares closed lower for a third consecutive trading session on NASDAQ on Tuesday. It has also been the biggest three-day string of losses since late January. The stock went down 3.09% ($8.82) to $276.54, after touching an intraday low at $270.09, or a price level not seen since October 23rd ($262.10).

Shares of Tesla Inc have retreated 16.91% so far in 2019 compared with a 13.06% 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.

“Much of the bull narrative has rested on Tesla being the next Apple, selling high-volume EVs at premium price point and at high gross margins, in part aided by a unique branded retail presence — a narrative we see as undermined by the recent price cuts and closing of most of the stores,” Barclays auto analysts Brian Johnson and Steven Hempel wrote in a research note, cited by CNBC.

The analysts also warned that the US electric car maker was not likely to recoup lower profit margins through higher sales volumes and cost savings.

“…we believe the sooner than expected announcement of the $35K model 3, rather than reflecting dramatic progress on manufacturing and distribution costs, likely reflects the need to replenish cash after the convert repayment, perhaps exacerbated by the weak first two months of US sales,” Johnson and Hempel noted.

According to CNN Money, the 28 analysts, offering 12-month forecasts regarding Tesla Inc’s stock price, have a median target of $337.50, with a high estimate of $530.00 and a low estimate of $192.00. The median estimate represents a 22.04% upside compared to the closing price of $276.54 on March 5th.

The same media also reported that 10 out of 29 surveyed investment analysts had rated Tesla Inc’s stock as “Buy”, while 7 – as “Hold”. On the other hand, 8 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 – $301.19
R1 – $313.60
R2 – $332.42
R3 – $344.83
R4 – $357.25

S1 – $282.37
S2 – $269.96
S3 – $251.14
S4 – $232.33