Tesla Stock plunges because Jaguar and Audi look like real threats

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Shares plummeted Wednesday as one analyst said competition from other automakers was reducing sales of its high-end vehicles.

Tesla shares (symbol: TSLA) have recently fallen 1.9% to $ 221.49, with the S & P 500 up almost 1%. Toni Sacconaghi, of Bernstein, wrote Wednesday that new competitors' vehicles could hurt Tesla's sales rather than the growth of the global electric vehicle market.

"The deterioration in the sales trajectory of the S and X models could be mainly due to competition, particularly in Europe, from Jaguar and Audi," Sacconaghi wrote. "Despite the introduction of new Jaguar and Audi offerings, sales of high-end electric vehicles (over $ 60,000) have not increased. [Jaguar] I-Pace and [Audi] e-Tron seemed to have moved Tesla units.

I-Pace was one of the first European opponents of Tesla's position in the sector. More are on the way. In the second quarter, Tesla's S and X models were delivered at approximately 18,000 copies, up from the first quarter, but down from the previous year.

Elon Musk, President and CEO of Tesla, said in July that, over time, these models would be "not so important" in terms of the total volume of vehicles sold by the company. At the present time, however, their higher prices help maintain margins, with the most affordable options being model 3 and future Y models.

"Make no mistake, Model 3 remains Tesla's most important product," Sacconaghi wrote. "By 2019, the 3 mass luxury model will likely account for more than half of the company's revenue, more than double the contribution of high-end luxury models S and X. Nevertheless, the S models and X remain the main reason for Tesla's return. to a deficit state since the beginning of the year. "

Part of the drag on the Tesla stock could still be Tuesday's news that the retailer
Walmart

(WMT) sued the company in a New York court, alleging "gross negligence" in the installation and maintenance of solar panels in several of the company's stores. A Tesla spokesperson did not immediately respond to Barron request for comment.

Sacconaghi has a Market Perform rating and a price target of $ 325 on the Tesla stock; The average FactSet is $ 265. Tesla is down about 32% in 2019 until Tuesday's close.

Send an email to David Marino-Nachison at [email protected]. Follow him to @marinonachison and follow Barron's Next to @barronsnext.

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