A lot of people have a lot of opinions about Tesla (NASDAQ: TSLA) stock — which might be the understatement of the century. According to TipRanks.com, 40 analysts who follow Tesla value it at anywhere from $350 to under $23 per share, making it difficult for investors to know which price is “right.”
Tiny stock shop GLJ Research has (and always has had) the lowest price target for Tesla. But with Tesla steadily cutting prices amid slowing sales of its electric cars, low-ball estimates have accumulated. Today, the third most pessimistic price target comes from one of the biggest names on Wall Street.
JPMorgan analyst Ryan Brinkman thinks Tesla stock is worth just $115 a share and he rates it a sell. That 12-month price target implies a 23% downside.
Why does Brinkman believe you should sell Tesla stock now? Tesla’s announced plans to lay off 10% of its workforce made it clear that Tesla selling 8.5% fewer cars last quarter year over year was because of weak demand for electric cars, not because of any constraints on Tesla’s ability to build cars fast enough.
Up until now, this was debatable. Tesla did suffer an arson attack, and it had parts shortages in Germany after Houthi pirates began impeding sea traffic through the Suez Canal. That might have explained the slow sales in Q1. But with supply lines back in place today, the only logical reason for laying off workers globally is if Tesla has more workers than it needs, to build the few cars it expects to sell in the future.
Hence the layoffs.
Now, this might change. Analysts who follow Tesla stock also estimate sales will double (to almost $200 billion), and earnings will nearly double (to more than $25 billion annually) over the next five years. But if Brinkman is right and Tesla’s “hypergrowth narrative” has been debunked by the layoffs, then there’s reason to doubt those predictions.
At more than 50x forward earnings, with a 20% projected long-term growth rate, Tesla stock might be a sell.
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for two decades, Motley Fool Stock Advisor, has more than tripled the market.*
They just revealed what they believe are the 10 best stocks for investors to buy right now… and Tesla made the list — but there are 9 other stocks you may be overlooking.
*Stock Advisor returns as of April 15, 2024
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Tesla. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
