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Tesla Could be In Major Trouble After Production Falters

October 3, 2017
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There has been  lot of hype around the electric car market as of late, with major brands such as GM making a splash by announcing that they will go full electric in the coming years. So what does all this do to what is arguably the most famous electric car brand in the world; Tesla?

After a year of astonishing stock performance, CNBC reports that Elon Musk’s company may be headed into a nose dive. In a conversation with Goldman analyst David Tamberrino, “the analyst increased his six-month price target for Telsa to $210 from $200, a 39 percent downside from Monday’s close.”

The trouble is, as CNBC reports, that Goldman sees the Model 3 as the company’s future and the recent lag in production can lead to major holes emerging.

We “maintain our more cautious ramp of Model 3 deliveries which fell below our Street-low estimate for the quarter. We believe this likely puts downward risk to the company’s communicated S-curve to the Model 3 production ramp,” Tamberrino wrote in a note to clients Tuesday. “We continue to maintain our more cautious Model 3 ramp, which is far below company targets.”

Tesla has seen unprecedented stock growth this past year, something the bears have been looking at constantly. Business Insider reports that shorting action on Tesla’s stock has begun to yield big payouts for investors:

Through Monday, investors had made $72 million over a two-week period as Tesla’s stock plunged 11%, putting a dent in a massive year-to-date gain that totaled 80% at its peak, according to data compiled by the financial-analytics firm S3 Partners. Their mark-to-market profit is even bigger over the past month, totaling $160 million, according to the data.

If Goldman’s prediction proves to be correct, then we could see more call options going forward. The speculative trading could also help drag the stock down, especially if the volume increases.

Tesla has always been a volatile stock, with the company constantly looking to expand at what many view as an unrealistic rate. Keep this in mind if you choose to invest in the company going forward. While their approach has netted investors some healthy profits, it can bite them just as quickly.

To read CNBC’s article on Goldman’s evaluation of Tesla, click here.

To read Business Insider’s article on the increase in shorting activity on Tesla, click here.

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