Tesla falls as analyst says profit goal a ‘Kilimanjaro-like’ climb

New York: Tesla Inc. faces a ‘Kilimanjaro-like uphill climb’ to hit profitability in the second half, said Wedbush analyst Dan Ives, who cited concerns about demand and growth.

In a note Sunday, Ives described the electric car maker’s predicament as a “code red situation” and cut his price target on the stock to $230 (Dh844) from $275. Ives slashed his target from $365 just last month. He was once among the most bullish analysts covering Tesla.

Ives said in his note he has “major concerns around the trajectory of Tesla’s growth prospects and underlying demand on Model 3 in the US over the coming quarters.”

Tesla delivered just 63,000 cars in the first quarter but expects to deliver 90,000 to 100,000 cars in the second quarter, and 360,000 to 400,000 for the year. Ives said hitting the full-year target is going to be a “Herculean task” and sees 340,000 to 355,000 as a more likely scenario.

A spokeswoman for Tesla in Beijing had no immediate comment, while a representative for the company in the US didn’t immediately respond to an email out of hours.

Chief Executive Officer Elon Musk recently warned employees that he will be looking closely at expenses, shortly after pitching a future of autonomous robot taxis to investors as the key to Tesla becoming a $500 billion company.

‘Additionally, with a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavours when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure in our opinion with headwinds abound,’ wrote Ives.

Tesla shares closed at the lowest level in almost 2 1/2 years on Friday after Musk called for a “hard-core” review of all the electric-car maker’s expenses and an analyst warned of potentially severe fallout from a fatal crash involving Autopilot.