Sell Tesla Stock Before It Stalls Out Completely! (TSLA)

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Just last week I predicted that 2016 would be the worst year ever for Tesla Motors Inc (TSLA) stock.

tslaShares were down 13% already, so it wasn’t the boldest call I’ve ever made. But it’s looking more and more correct by the day, and I’m more confident in my bearishness than ever before.

Now it seems that even Wall Street analysts — some of them famous for their outlandishly bullish calls on TSLA stock — are hopping along for a ride down “Reality Road,” my preferred transit route when navigating the stock market.

Pacific Crest slashed expectations for just about every metric you could think of on Tuesday: Revenue, earnings per share, deliveries … none of them will turn out to be quite as hot as people expected, it seems.

While utterly unsurprised, I applaud Pacific Crest for biting the bullet and sharply revising its numbers. Now the second major research firm to issue an unflattering note on Tesla stock in the last two days, TSLA traded down more than 7% on Tuesday.

I say this for your own good, Tesla investors: Get out now. Things are only going to get worse this year.

Tesla Model X Isn’t so Sexy

Tesla Motors Inc CEO Elon Musk ranks among the most brilliant minds on earth. But even Musk isn’t immune from the sort of Silicon Valley hubris that leads to prepubescent jokes, fancying Tesla vehicles as real-life Bond cars and aiming to name his first three vehicles the Model S, the Model X and the Model E.

Rearrange the letters and you get … S-E-X! See what he did there?

Unfortunately, Musk’s silly attempt at humor was ruined by Ford (F), who owned the rights to the “Model E” trademark.

Maybe it was foreshadowing. Analysts are starting to realize that Tesla — and especially the Tesla stock price — isn’t so sexy after all.

Pacific Crest’s Brad Erickson slashed 2016 EPS expectations for TSLA stock from 76 cents to 27 cents upon realizing the Model X isn’t selling well. He also cut expectations for fourth-quarter 2015 deliveries from 17,820 to 17,400, and cut Q4 revenue projections from $1.78 billion to $1.73 billion. Saying demand for the Model S could be peaking, Erickson also warns:

“Consistent with our October checks, our latest checks with U.S. sales centers indicate that Model X orders are still lagging expectations.”

Further, the tone that noted Tesla fanboy/Morgan Stanley analyst Adam Jonas took in a note to clients on Monday hints at serious trouble for Tesla. Here’s what the guy did:

  • He gutted his embarrassingly optimistic previous price target of $450 per share, lowering it to a still-unreasonable $333 per share.
  • He cut his 2016 delivery volume estimates.
  • He admitted that his 2020 forecasts for total vehicle deliveries were less than half the 500,000 units TSLA itself is aiming for.
  • He reiterated his belief that the Model 3 won’t come around until late 2018 — a far cry from the 2017 date that Tesla has long stated.

Tesla bulls: We have never seen eye to eye. You have eviscerated me on almost every time I say something bearish about TSLA stock. But please, I beg of you, look at the above points and tell me why any rational investor has no reason to worry in 2016!

Remember, the above points are coming from Adam Jonas — an analyst I called out as a BS artist last August, when he slapped a $465 price target on TSLA. At the time it was a 91% premium to the prior day’s closing price of $243. He had to project revenue out to the year 2029 to derive that absurd price.

Tesla’s fundamental problem at this point is its compulsive tendency to overpromise, underdeliver and delay, which it seems to think it’s allowed to do because it’s just such a sexy company, isn’t it?

Sorry, Elon. You can’t get away with treating customers and TSLA stock owners like this forever. I got an email from a frustrated reader last week who cancelled his Signature X order after waiting for two years, for cryin’ out loud. I don’t blame him for wanting his $40,000 deposit back. I would be beyond irate.

Finally, analysts are starting to open their eyes to the blatant, systemic problems at Tesla. And although dialing back the price target to $333 is big of Morgan Stanley’s Jonas, it’s still a patently absurd one-year target.

As I said back then of Morgan Stanley’s $465 price target — about six months and 25% ago —  “you’ve got a better chance of spotting the Easter Bunny” than seeing Tesla shares hit that level in the next year.

Join me on Reality Road, folks. Please. You’ll be glad you did.

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/tsla-tesla-stock-price/.

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