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After Morgan Stanley, Citi Hits Tesla with a Bearish Outlook

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May. 22 2019, Published 10:42 a.m. ET

Tesla stock

In the last couple of weeks, Tesla (TSLA) has attracted a storm of negativity. On May 22 at 9:04 AM EDT, Tesla stock fell to $198.77 in the premarket session, down 3.1% from its previous day’s closing price. Out of the last 11 sessions, the stock has settled in the red in ten. During this timeframe, Tesla stock has lost nearly 20%.

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Citi hits Tesla with a bearish outlook

Earlier today, CNBC reported that Citigroup Global Markets analyst Itay Michaeli expects Tesla stock to fall to $36 in a “bear case” scenario, down ~82.4% from its closing price on May 21. The analyst sees a 40% chance of this bearish scenario becoming a reality.

Morgan Stanley analyst Adam Jonas increased his bearish outlook on the electric carmaker yesterday, saying it could fall to as low as $10 in a worst-case scenario compared to his earlier estimate of $97. Jonas said Tesla’s exposure to geopolitical tensions could hurt its car demand in China.

On May 22, Michaeli also cut his main target price on Tesla to $191 from $238 while maintaining a “sell” rating. He cited “lingering demand” for Tesla cars and the company’s “free cash flow issues” for the target price cut.

Impact on Tesla stock

Key US indexes are trading on a positive note today, continuing yesterday’s recovery after the United States eased trade restrictions on Chinese tech giant Huawei. Read Trump in Damage Control Mode, US Eases Ban on Huawei to learn more.

Despite the consistent broader market recovery, Tesla could continue to suffer today as well. Technically, no major support level in Tesla stock lies above $181, so the possibility of the stock testing this support level in the near term remains open. Read Key Support Levels to Watch as the Tesla Sell-Off Continues to learn more.

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