Morgan Stanley limits the amount of Tesla (NASDAQ: TSLA) to $ 260, indicates that stocks will remain "volatile"

Tesla Inc The shares (NASDAQ: TSLA) have struggled since the company announced a reduction in the price of Model 3 and the closure of its physical stores last month. The company reversed its course over the weekend, informing investors that it would increase prices by 3% to allow some of the stores to remain open. A Wall Street analyst said Tuesday that Tesla's main problem was demand.

L & # 39; analyst

Morgan Stanley analyst Adam Jonas reiterated the weighting equal to Tesla and reduced the price target from $ 283 to $ 260.

The thesis

The reduction in Tesla's prices and costs, as well as other measures to stimulate demand in the short term, are all indications that the company could experience an "air pocket", said Jonas in a note. .

"We reduced first quarter deliveries by 23% to 48,000 units, which we believe could be slightly below consensus to allow for sluggish US sales and potential barriers to international shipments."

In addition to reducing shipments and reducing the target price, the analyst lowered its estimate of the average transaction price of Model 3 by more than $ 1,000, aiming for an overall TPA of only $ 53,000 for Tesla in the fourth quarter. quarter. Jonas also lowered his estimate of the automotive gross margin for the first quarter from 1.7% to 22.3% and his estimate of the annual margin of 1.5% to 22.6%.

Jonah has tripled its estimated net losses for the first quarter, from less than $ 32 million to minus $ 311 million. This net loss estimate includes negative free cash flow of $ 935 million. For the whole year, Jonas claims $ 1.1 billion in cash.

For investors, Jonah said expect more from the same.

"We expect the share price to remain in a volatile range with a slight decline in our fair value measurement."

Price action

The Tesla stock was down 2.78% at the time of publication Tuesday and about 22% in the last three months.

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Photo courtesy of Tesla.