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Tesla's stock price could collapse after its dreadful earnings report

Brian Sozzi
Editor-at-Large

Tesla’s first quarter stunk.

And now it may be time for the Tesla fanboys to pay the ultimate price in the form of major re-rating in the electric car company’s valuation.

“It was an extremely difficult quarter,” Garrett Nelson, CFRA senior research analyst, said on Yahoo Finance’s The First Trade on Thursday. Nelson, who holds a Sell rating on Tesla and a $225 price target, pulled no punches when asked if the stock price could flat out collapse after the brutal start to 2019.

“We think so,” Nelson said. “Guidance looks unrealistic, and that’s a problem going forward.”

Tesla’s stock fell 3% in afternoon trading.

Everything that could go wrong with Tesla pretty much did in the first quarter: delivery delays, price discounts on the Model 3 and robust cash burn were among the few lowlights.

The Palo Alto, California-based company posted an adjusted loss per share of $2.90 for its fiscal first quarter. This was wider than the $1.30 loss per share consensus analysts were expecting, according to Bloomberg-compiled data. In the same quarter last year, Tesla lost an adjusted $3.35 per share.

Tesla’s first-quarter revenue of $4.54 billion missed average expectations for sales of $4.84 billion, according to Bloomberg data. The company’s cash flow plunged $1.5 billion from the fourth quarter.

Meanwhile, Tesla’s earnings call with Wall Street — hosted by always erratic CEO Elon Musk— was littered with red flags.

Some key concerns seen by Yahoo Finance:

  • Musk said “the ship has sailed” on taking Tesla private.

  • Musk said he is “unsure” what to do about the company’s volatile stock price.

  • Musk said there is “merit” to the idea Tesla may have to raise capital this year.

Others on Wall Street were as disenchanted about Tesla’s quarter and outlook as Nelson.

“The demand story at Tesla is quickly changing and the company has unfortunately not adjusted to an evolving EV landscape (especially in the US) with the well thought out marketing and distribution logistics needed to manage this difficult and complex hand holding process for customers, employees, and investors,” wrote now former Tesla bull Dan Ives at Wedbush. “To this point, in our 20 years of covering tech stocks on the Street we view this quarter as one of top debacles we have ever seen while Musk & Co. in an episode out of the Twilight Zone act as if demand and profitability will magically return to the Tesla story.”

Ives slashed his rating on Tesla’s stock to neutral from Outperform. His new price target is $275, down from $365.

But hey, at least Tesla reiterated its 2019 delivery guidance of 360,000 to 400,000.

Yahoo Finance’s Emily McCormick contributed to this story.

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