Morgan Stanley has cut its worst-case forecast on Tesla Inc.'s (TSLA) share price from the previous estimate of $97 to just $10, dealing another blow to the luxury electric car maker.
The worst-case or "bear case" scenario by Morgan Stanley analysts takes into account the risk posed if Tesla misses its current sales outlook for China by about half. The analysts expressed concerns at Tesla's debt load and reliance on Chinese demand for its vehicles.
"Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention," analysts led by Adam Jonas said in the note.
However, Jonas maintained his main price target for Tesla's stock at $230.
During Monday's intra-day trading, Telsa's shares fell below the $200 level for the first time since December 2016 after Wedbush Securities analyst Daniel Ives slashed his price target on the luxury electric car maker's stock to $230 from $275, citing "major concerns" around the trajectory of Tesla's growth prospects.
Ives said it would be a "Herculean task" for Tesla to hit its full-year production target and added that he sees Tesla producing 340,000 to 355,000 vehicles as a more likely scenario.
While reporting its first-quarter financial results in April, Tesla said it expects to deliver 90,000 to 100,000 cars in the second quarter, and 360,000 to 400,000 vehicles for the full year.
Financial services firm Robert Baird & Co. also said Tuesday that it has cut its price target on Tesla's stock to $340 from $400.
Tesla's shares are currently trading at 202.82, down $2.54 or 1.24 percent on a volume of 8.55 million shares.
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