Analysts Dial Back on Tesla Forecasts as Musk Accuses SEC of “Power Grab”


Both Tesla (NASDAQ: TSLA) and it’s chief executive Elon Musk have been coming under scrutiny lately. Most recently, the eccentric entrepreneur has found himself in something of a conflict between the SEC, which has accused Musk of breaking a previous deal about having legal-counsel monitor his potential market-moving tweets.

The agency has demanded that a judge hold the CEO in contempt. In response, Musk asked the judge to reject the order and accused the agency of pursuing an “unconstitutional power grab.” In the midst of this drama, analysts have further downgraded their expectations for the automaker going forward.

Overall, shares of Tesla have declined around 15 percent since the start of the year, with today seeing another drop in the company’s stock price. While part of this was due to Musk’s comments late Monday regarding the SEC, most of this came from a number of analysts downgrading their expectations for the company and cutting down their price targets.

Adam Jonas at Morgan Stanley cut his target for the stock down $20 to $260, which is substantially below FactSet’s average of $337. “We expect the share price to remain in a volatile range with modest downside to our assessment of fair value,” wrote the analyst according to Barrons. “We are not inclined to buy now as we don’t believe we’d be compensated for the amount of risk we’re taking.”

Macquarie Research, a company which is far more optimistic about Tesla than Morgan Stanley, also cut its price target by around $30. Their estimates still sit at the $400 mark, and the company reiterated it’s “outperform” rating, adding that Tesla has “a path to continued demand through various new geographic releases, refreshes, and new introductions.”

Overall, tumbling stock prices along with this SEC complaint couldn’t come at a worse time as the company faces problems from all fronts. Growing debts, a lack of profitability, competitive pressures, and the ballooning cost of expanding all weighs upon Tesla’s outlook, yet some shareholders regard Musk’s comments as the most egregious of the company’s problems.

According to The Washington Post, an attorney for Sean Gouthro, Tesla’s former head of global security operations center and investigations, revealed that a third whistleblower tip has been filed with the SEC against Tesla. This joins previous allegations made by Karl Hansen, who accused the company of spying on employees while a third employee, Martin Tripp, told the SEC that in some cases there were dangerous manufacturing conditions for Tesla’s cars. The company denied all of these claims, pressing back with their own litigation.

In response to today’s news, shares of Tesla dropped around 2.6 percent.

Tesla Company Profile

Tesla, Inc. designs, develops, manufactures, and sells electric vehicles, and energy generation and storage systems in the United States, China, Norway, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers sedans and sport utility vehicles.

It also provides electric vehicle powertrain components and systems to other manufacturers; and services for electric vehicles through its company-owned service centers, Service Plus locations, and Tesla mobile technicians. This segment sells its products through a network of company-owned stores and galleries. – Bloomberg