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Tesla hits another rough patch with Wall Street

Reuters//Lucy Nicholson
We’ll see.
By Shelly Banjo
Published Last updated This article is more than 2 years old.

Tesla has fallen out of favor with Wall Street—again.

Shares in the electric car company posted their biggest one-day drop in five months after a number of banks downgraded the stock.

But don’t expect an end to all the loving missives about how it’s an innovative and disruptive company. Analysts still have lots of affection for Elon Musk’s super luxurious, techie electric car. It’s just that “we simply believe the stock price now fully reflects” what Tesla has to offer, said Pacific Crest Securities Brad Erickson in a research note explaining why he downgraded the stock.

Deutsche Bank echoed that sentiment in its decision to downgrade: “We believe that Tesla could become a dominant player. But at this point, Tesla’s shares appear to already reflect this opportunity.”

Baird analyst Ben Kallo, Wall street’s resident Tesla bull, countered the negative tone with a call Wednesday to use the recent dip as a buying opportunity.

“The launch of the [yet-to-be-released cheaper] Model X will increase Tesla’s brand value and help solidify Tesla as a long-term investment as this will be the third electric vehicle successfully launched by the company,” Kallo wrote in a research note.

Wall Street’s on-again, off-again love affair with Tesla dates back years. In 2013, Morgan Stanley told clients “what Tesla has accomplished isn’t luck, it’s real.” Two years later, Morgan Stanley tempered its expectations, explaining Tesla’s stock price could either multiply by 10 or fall by half. Go figure.

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