STREAMING NOW: Watch Now

JPMorgan dramatically slashes Tesla's stock price forecast

The Tesla crash may just...

Posted: Aug 20, 2018 9:31 PM
Updated: Aug 20, 2018 9:31 PM

The Tesla crash may just be getting started.

At least that's what JPMorgan Chase thinks. The Wall Street firm dramatically slashed its price 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 that it's "premature" to value Tesla based on a go-private deal that may or may not ever happen.

Musk tweeted on August 7 that funding for a takeover at $420 a share "has been secured." JPMorgan believes that recent events show that 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. That's 35% below current levels.

It's a stunning reversal. JPMorgan set its previous price target of $308 on August 8 based on Musk's optimism about a go-private deal.

JPMorgan noted that Musk's own statements create doubt about how close Tesla is to reaching a go-private deal financed by Saudi Arabia's sovereign wealth fund.

In a blog post last week, Musk wrote that "it was just a matter of getting the process moving" with the Saudis.

Those comments suggest that while a deal is "clearly possible," the process is "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 -- and then plunged. The SEC reportedly launched an investigation into Musk's statements. And Musk gave a tearful interview to The New York Times describing 120-hour work weeks and 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 good on Musk's proposal -- but they're also worried about Musk in general.

"Investors are likely most concerned about Musk's overall mindset and burn out in addition to the use of Ambien and possibly 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 not an option.

"Ford & Tesla are the only 2 American car companies to avoid bankruptcy. I just got home from the factory," Musk tweeted.

Tesla has repeatedly proved its doubters wrong. Since going public in 2010, Tesla has revolutionized the auto industry and accelerated the adoption of electric cars. While the company has struggled to turn a profit, its share price has skyrocketed. Now valued at $52 billion, Tesla is worth more than either Ford or General Motors.

But Tesla's goal of rapidly building affordable cars for mass markets has proven difficult. The company has been forced to raise money and 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.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 268672

Reported Deaths: 5917
CountyCasesDeaths
DeSoto18020198
Hinds17192342
Harrison14654214
Rankin11404225
Jackson11146194
Lee9160149
Madison8736173
Jones6934120
Forrest6324126
Lauderdale6212198
Lowndes5623124
Lafayette5295102
Lamar515565
Washington4984125
Bolivar4187111
Oktibbeha413686
Panola390784
Pontotoc383461
Warren3766103
Monroe3746112
Marshall362273
Union361966
Pearl River3578107
Neshoba3528160
Leflore3148110
Lincoln311489
Hancock304263
Sunflower296079
Tate282964
Alcorn276257
Pike275985
Itawamba272665
Scott268055
Yazoo259956
Prentiss257255
Copiah254649
Coahoma253656
Tippah252652
Simpson246072
Leake239367
Marion230774
Covington226173
Grenada225874
Wayne219337
Adams218172
George211041
Winston208971
Newton202748
Attala198265
Tishomingo197861
Chickasaw191546
Jasper185839
Holmes173268
Clay169538
Tallahatchie158835
Stone154727
Clarke151062
Calhoun143122
Smith134226
Yalobusha125435
Walthall116638
Greene115930
Noxubee114726
Montgomery113136
Lawrence109317
Carroll107722
Perry106431
Amite103829
Webster99024
Claiborne90426
Jefferson Davis90231
Tunica89722
Benton87423
Humphreys86225
Kemper81820
Quitman71611
Franklin71517
Choctaw64914
Wilkinson60325
Jefferson57521
Sharkey45917
Issaquena1616
Unassigned00

Alabama Coronavirus Cases

Cases: 449086

Reported Deaths: 7172
CountyCasesDeaths
Jefferson656061094
Mobile32260595
Madison28795237
Tuscaloosa21859277
Montgomery20388348
Shelby19707139
Baldwin17629217
Lee13482112
Morgan12795154
Etowah12265213
Calhoun11730228
Marshall10543133
Houston9221182
Limestone849485
Cullman8412143
Elmore8379123
Lauderdale8049121
DeKalb7985122
St. Clair7985144
Talladega6637114
Jackson611557
Walker6078185
Colbert5650104
Blount556895
Autauga549967
Coffee473471
Dale418692
Franklin380153
Russell364216
Chilton351379
Covington347986
Escambia343446
Tallapoosa3228111
Dallas3164105
Chambers313775
Clarke311139
Pike269435
Lawrence259759
Marion256667
Winston236443
Bibb226151
Geneva217151
Marengo213332
Pickens203031
Barbour189840
Hale189748
Fayette183534
Butler176660
Cherokee167333
Henry162229
Monroe154221
Randolph149536
Washington144727
Clay131650
Crenshaw127048
Macon124638
Cleburne124128
Lamar122024
Lowndes118637
Wilcox110022
Bullock107429
Perry100819
Conecuh99123
Sumter91228
Greene78624
Coosa66119
Choctaw52424
Out of AL00
Unassigned00
Tupelo
Cloudy
35° wxIcon
Hi: 47° Lo: 34°
Feels Like: 27°
Columbus
Cloudy
34° wxIcon
Hi: 49° Lo: 35°
Feels Like: 28°
Oxford
Cloudy
30° wxIcon
Hi: 46° Lo: 31°
Feels Like: 25°
Starkville
Cloudy
34° wxIcon
Hi: 47° Lo: 34°
Feels Like: 26°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather