Tesla (NASDAQ:TSLA) has started 2019 in a disappointing fashion. The 3.8% rise in Tesla stock during 2018 has been nearly wiped out in two sessions, with TSLA stock already down 3% YTD, barring a strong Friday in wake of a strong jobs report.

The culprit is an update from the company on fourth-quarter deliveries. A miss relative to estimates, and the announcement of a price cut in the U.S., spooked investors and led to a selloff on Wednesday.

As always is the case when it comes to Tesla stock, bulls and bears saw the development very differently. On this site, Luke Lango argued that the news was positive, as it showed continued market share growth for Tesla among U.S. consumers. As Lango and others have argued, a modest miss in terms of deliveries doesn’t change that case.

To bears, however, the report is at least concerning — and it’s potentially the beginning of the end for TSLA stock. The price cut suggests initial demand already has been worked through. Supposed catalysts from new markets and new products can’t be relied on. And thus, the growth story behind TSLA stock has taken a huge hit.

Personally, I’m still bearish on Tesla. Last month, I called it one of 12 2018 winners that would be 2019 losers — and I still believe there’s more downside ahead.

The price cut, in particular, looks like a major concern. And if Tesla’s other catalysts don’t show up — and history suggests they won’t — 2019 could be a very difficult year for Tesla stock.

The Reservation Question

In its release, Tesla noted that over three-fourths of Model 3 orders in the fourth quarter came from new customers — not reservation holders. That’s an interesting piece of information, and one that can be taken to support either the bull case or the bear case. Bernstein analyst Toni Sacconaghi broke down the argument in a note after the release (parentheticals in original):

“We estimate that nearly three quarters of Model 3 reservation holders in the U.S. have not yet ordered a Model 3. It is unclear if this is bullish (latent demand) or bearish (lost interest).”

In other words, are the new customers ordering 75%-plus of the Model 3s in the quarter a sign that demand extends beyond Tesla fans who put down reservations ahead of time? Or are most of the reservation holders unlikely to move forward with a purchase, which suggests a potential “demand cliff” for U.S. sales in 2019?

Bearish Signs for Demand

This is a key question looking to the next few quarters. If demand is broad and deep enough, Tesla’s production ramp will lead to continued GAAP profitability after the company’s big third quarter. If it’s not, the fixed-cost production model fails. Tesla is left with excess inventory and delivery figures below what it can produce. Margins plunge — and profits potentially reverse back to losses.

It’s a tough question to answer because Tesla has stopped disclosing reservations. But that itself seems potentially bearish. Tesla and CEO Elon Musk are not shy about disclosing information that makes the company look good. With convertible debt maturing in March, the near-term TSLA stock price matters. If the reservation count was growing, one would think Tesla would let investors know.

The importance of the demand question also amplifies the importance of the price cut. If demand is so strong out of the gate, why is Tesla cutting prices? Bears point out that $2,000 is just a few percentage points worth of revenue. But it’s also just a few percentage points of the sale price. Is a $2,000 reduction moving the needle, particularly given a $3,750 reduction in federal subsidies? If not, what’s the strategy here — and if there are indeed 200,000-300,000 reservation holders out there, why does Tesla feel the need to stoke demand?

The lack of confidence on the demand front is an issue for Tesla, and for Tesla stock. And it’s a big reason why the market reacted poorly to Wednesday’s news.

The 2019 Catalysts

Of course, the Tesla story is about more than just U.S. sales of the Model 3 (although it’s been easy to forget that in the past few months). Tesla said deliveries to Europe and China would begin in February. A right-hand drive model will be available later this year. And the long-awaited Model Y reportedly should be unveiled as soon as March.

There are some catalysts for Tesla stock on the horizon … hopefully. But the risk in the near- to mid-term is that those catalysts won’t arrive on schedule.

Tesla and CEO Elon Musk have a long list of broken promises. Bulls might cheer the Q4 figures, but Tesla produced less than 5,000 Model 3 units per week in the quarter. That figure was the big target the company cheered about hitting two quarters ago (albeit for the last week of the quarter).

Looking back further, production seems an even bigger disappointment. Here’s Musk on Tesla’s Q2 conference call eighteen months ago:

“But what people should absolutely have zero concern about is that Tesla will achieve a 10,000 unit production week by the end of next year.”

Obviously, that target has been missed, and quite badly so.

So when, exactly, will the Model Y actually be ready? Is Tesla really going to be shipping into Europe in a matter of weeks when the company hasn’t received “homologation” approval in those markets yet? And how is demand in China going to hold up considering that Apple (NASDAQ:AAPL) sales are plunging in that market, whether due to weaker macro factors and/or anti-U.S. sentiment?

Add to that competition in the U.S. from General Motors (NYSE:GM), in particular, and European and Japanese rivals as well, and the risks to TSLA stock continue to pile up.

TSLA Stock Could Have More Downside

To be sure, Tesla isn’t necessarily going bankrupt this year (or soon), as some ardent bears argue. But $300-plus still seems an awfully steep price to pay looking out toward 2019.

Broad markets clearly are nervous. The China opportunity is a big part of the Tesla story, and it looks, at best, smaller than hoped. Any slowdown in Model 3 demand puts pressure on the next wave of growth catalysts. That’s not a good thing for a company with a long history of missing deadlines.

Simply put, this can get worse for Tesla for a number of reasons. The reaction to Wednesday’s news not only makes sense, it may not have been negative enough.

As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.