Tesla Shares Plummet as Wall Street Analyst Cuts Estimates on Shipments

The coronavirus pandemic impact is hitting electric vehicle maker Tesla as a Wall Street analyst has cut estimates on shipments to reflect current views of the impact the virus will have on demand.

Joseph Spak of RBC Capital Markets cut his price target on Tesla from $530 to $380, with a rating of underperform.

Shares of Tesla were tumbling on the price target cut, falling 18.6% on Monday to close at $445.07. Shares have now fallen over 50% since the stock hit a record high of $968.99 on February 4th.

“We believe demand will be constrained and Tesla will have to cut production,” Spak wrote in a note. “Tesla’s products are still discretionary, luxury purchases,” he said. “As we believe the consumer will be scarred by Covid-19, midterm demand could be lower.”

Spak also cut estimates on Tesla deliveries in 2020 by 30%, to 364,600 vehicles, from 524,200. For 2021, he now expects deliveries of 572,100 vehicles. This is a drop of 7.5% from prior expectations of 618,000.

“We continue to remind investors automaking is a very capital intensive and cyclical business,” Spak wrote. “We believe this experience could dent the multiple (that) investors will be willing to pay for the Tesla story.”

“The coronavirus epidemic has severely disrupted communications and supply chains across China,” said Chief Financial Officer Zachary Kirkhorn in a conference call with analysts in January.

Disclaimer: We have no position in Tesla Inc. (NASDAQ: TSLA) and have not been compensated for this article.