Tesla shares drop nearly 5% owing to Model 3 delay speculations

0
Share prices decline

Tesla has been spending a lot of money for its Model 3 sedan and as new reports flew in that the electric car maker might delay the launch of its new car, the company’s share prices plunged by nearly 5 per cent.

There have been concerns that Tesla’s Model 3 production this year might be delayed and combine this with expectations that the electric car make could sell stock to raise $1.7 billion, analysts have downgraded Tesla stock from “neutral” to “sell”.

After being downgraded by Goldman Sachs, shares of Tesla dropped 4.83 percent to $244.52 in morning trade on Monday. This effectively brings the total decline in share prices to 11 per cent ever since the company posted its quarterly figures. If it closes at that level, it will have been the worst three-day performance for the shares since June last year.

Even with the recent drop, Tesla has surged more than 30 percent since early December and is up 14 percent in 2017.

In recent years, stocks of Tesla have been trading at various prices between $180 and $280 in recent years, and after hitting 2015 highs earlier this month, it may be headed toward the bottom of that range, Goldman Sachs analyst wrote in a note to clients.

Tesla investors and short sellers disagree about whether the company will become a carbon-free energy and transportation heavyweight or be overtaken first by older, deep-pocketed manufacturers such as General Motors Co.

Seven analysts recommend selling Tesla’s shares, while six recommend buying and seven have neutral ratings. Few stocks on Wall Street attract more “sell” than “buy” ratings.

Last May, Goldman Sachs’s previous Tesla analyst, Patrick Archambault, raised his rating on Tesla to “buy” from “neutral” hours before the bank helped launch a secondary stock offer for the company.

LEAVE A REPLY