Tesla (NASDAQ: TSLA) Shares fell for a third straight day on Tuesday, down 4.1% through 10 a.m. ET after a rating downgrade on Wall Street and discouraging commentary from news source Electrek on electric vehicles (EV).
Longtime Tesla bear GLJ Research today announced a “street low” price target for Tesla stock, saying the $155 stock is worth less than $23 per share. At the same time, Electrek reported that regardless of what Elon Musk says, Reuters was right to report that Tesla is canceling the Model 2.
What about Tesla’s low-cost Model 2 EV?
You know the story. In early April, Reuters reported that Tesla “canceled” plans to build the low-cost electric car, commonly referred to as the “Model 2.” With characteristic subtlety, Musk disputed the report:
But now Electrek backs the Reuters report – largely.
The Model 2, says Electrek, has indeed been “effectively scratched” and “completely dismantled.” Instead of the Model 2, Tesla is going all-in on its self-driving robotaxi car and investing resources into building a massive data center to support robotaxi operations.
Is Tesla stock a sell?
You can argue all day about whether ‘effectively scrapped’ and ‘completely defunded’ equal ‘cancelled’. (Musk could still decide to build the Model 2 after But in the end, Reuters was right in its reporting, and Elon Musk’s credibility took another hit today.
It doesn’t help that, in addition to the Electrek story, GLJ Research saw a double-digit price target hit on Tesla stock on Tuesday, predicting (in fact) that it will fall 85% over the next twelve months as the company continues to slow production . and lowering prices.
Personally, I don’t believe in GLJ’s prediction. The last time Tesla was priced at nearly $23 per share, it was because the company was losing money. While things aren’t great right now, most analysts agree that Tesla will still make more than $8 billion this year. It’s hard to call such a stock a sell.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Tesla. The Motley Fool has a disclosure policy.
Why Tesla Stock Keeps Falling was originally published by The Motley Fool
