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Why Tesla's stock is brutally damaged

Brian Sozzi

Tesla’s stock (TSLA) price is in full meltdown mode just like a defected electric car battery.

Shares of the cash hemorrhaging electric car outfit led by the one and only Elon Musk has tanked more than 43% this year. A good chunk of the losses — 26% — have come in the past month alone as Wall Street gangs up and attacks the automaker’s business prospects.

“Tesla’s stock is damaged,” said Oppenheimer Chief Technical Analyst Ari Wald on Yahoo Finance’s The First Trade. Wald thinks there could be downside risk to Tesla’s stock to $180.

Tesla stock currently trades at about $195. The last time Tesla stock dipped below $200 was in 2016.

Indeed trying to pick a bottom on Tesla would be as stupid as jumping in front of one speeding 100 mph in autopilot mode.

Wall Street hammers Tesla

At this point, one has to wonder if Wall Street is colluding against Tesla (not Trump). How else can one explain the steady drumbeat of negative research on Tesla over the course of four days? Something smells off.

But in all likelihood, it reflects an analyst community that is piling on a damaged stock (to Wald’s point) in an effort to get media attention and make clients a quick buck.

The chorus of bears on Tesla are, well, simply getting out of control. Although, the harsh calls are fully deserved given Tesla’s terrible fundamentals and bevy of negative news flow of late (new round of expenses cuts; $2.7 billion capital raise; price cuts on the Model S and X).

Thursday brings the latest bear call from long-time Tesla fanboy Gene Munster at Loup Ventures.

Munster slashed his 2019 delivery estimate by 10% to 310,000 owing to concerns around demand in China amid heightened trade war tensions. While Munster is still generally upbeat on Tesla’s future and cash flow (for the next two years, at least), he now thinks greater near-term caution is warranted.

“We are lowering our numbers as a precautionary measure related to two unknowns. First, we are now factoring in that Tesla deliveries will be impacted by tariffs entering China. Ours is a minority view because most investors expect Tesla will be exempt from tariffs given the company’s investment in the Shanghai Gigafactory. Second, non-tariff factors that will impact China demand include Chinese consumers boycotting Tesla and Chinese officials adding complexity to the delivery process,” Munster says.

Tesla cars sit parked outside a Tesla dealership in the Red Hook neighborhood in Brooklyn in New York City. (Photo by Drew Angerer/Getty Images)

Tesla shares lost as much as 6% Thursday morning on the bearish comments.

On Wednesday, Citigroup analyst Itay Michaeli took a swipe at Tesla. Michaeli reiterated his Sell rating on Tesla, citing concerns on sluggish consumer and free cash flow generation. Also looking for some headlines on Wednesday was Bank of America analyst John Murphy, who reiterated his own Sell rating on Tesla.

The week began with Wedbush analyst Dan Ives saying Tesla would need to raise another $1 billion in cash. Then Morgan Stanley analyst Adam Jonas said Tesla’s stock could hit $10.

It’s been a wild week for Tesla and it’s only Thursday.

There is a “crisis of confidence” in the company, said Yahoo Finance senior columnist Rick Newman

That’s for sure.

Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi

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