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JPMorgan dramatically slashes Tesla's stock price forecast

The Tesla crash may just...

Posted: Aug 20, 2018 10:31 PM
Updated: Aug 20, 2018 10:31 PM

The Tesla crash may just be getting started.

At least that's what JPMorgan Chase thinks. The Wall Street firm dramatically slashed its price target on Elon Musk's car company on Monday, causing Tesla shares to briefly tumble.

In a critical research report, JPMorgan analyst Ryan Brinkman wrote that it's "premature" to value Tesla based on a go-private deal that may or may not ever happen.

Musk tweeted on August 7 that funding for a takeover at $420 a share "has been secured." JPMorgan believes that recent events show that funding has not been secured -- "nor was there any formal proposal."

By valuing Tesla on "fundamentals alone," the stock should sink to $195 by December, Brinkman wrote. That's 35% below current levels.

It's a stunning reversal. JPMorgan set its previous price target of $308 on August 8 based on Musk's optimism about a go-private deal.

JPMorgan noted that Musk's own statements create doubt about how close Tesla is to reaching a go-private deal financed by Saudi Arabia's sovereign wealth fund.

In a blog post last week, Musk wrote that "it was just a matter of getting the process moving" with the Saudis.

Those comments suggest that while a deal is "clearly possible," the process is "much less developed than we had earlier presumed," JPMorgan wrote.

Tesla's wild ride

Musk's tweet set in motion a strange series of events for Tesla. The stock spiked as high as $387.46 -- and then plunged. The SEC reportedly launched an investigation into Musk's statements. And Musk gave a tearful interview to The New York Times describing 120-hour work weeks and his use of Ambien to sleep.

As much as a quarter of Tesla's market value has vanished since Musk's initial tweet about going private. Investors are voicing skepticism about the electric car maker's ability to make good on Musk's proposal -- but they're also worried about Musk in general.

"Investors are likely most concerned about Musk's overall mindset and burn out in addition to the use of Ambien and possibly other drugs," analyst Gene Munster wrote to clients on Friday.

Even Arianna Huffington penned an open letter urging the Tesla CEO to slow down. Musk responded -- in a 2:30 a.m. PT tweet -- by saying slowing down is not an option.

"Ford & Tesla are the only 2 American car companies to avoid bankruptcy. I just got home from the factory," Musk tweeted.

Tesla has repeatedly proved its doubters wrong. Since going public in 2010, Tesla has revolutionized the auto industry and accelerated the adoption of electric cars. While the company has struggled to turn a profit, its share price has skyrocketed. Now valued at $52 billion, Tesla is worth more than either Ford or General Motors.

But Tesla's goal of rapidly building affordable cars for mass markets has proven difficult. The company has been forced to raise money and take on vast amounts of debt while attempting to meet aggressive goals.

Tesla's expansion into high-volume segments "seems fraught with greater risk," JPMorgan wrote.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 751242

Reported Deaths: 13795
CountyCasesDeaths
Marion1032931788
Lake556911009
Allen41692692
St. Joseph36990565
Hamilton36588417
Elkhart29398461
Tippecanoe22901226
Vanderburgh22556400
Porter19356325
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Madison13149344
Vigo12614253
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Monroe12207176
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Warrick7860156
Floyd7811180
Grant7242179
Wayne7162201
Boone6966103
Morgan6761141
Dubois6218118
Marshall6209116
Cass6016110
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Noble581488
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Gibson444894
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Martin91715
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Union72810
Ohio57911
Unassigned0420

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1108736

Reported Deaths: 20166
CountyCasesDeaths
Franklin1287201467
Cuyahoga1157922211
Hamilton813971250
Montgomery525481043
Summit484271001
Lucas43353820
Butler39013606
Stark33332929
Lorain25672505
Warren24591303
Mahoning22370603
Lake21207388
Clermont20117253
Delaware18852136
Licking16662222
Fairfield16574204
Trumbull16548482
Medina15610271
Greene15281248
Clark14237306
Wood13292200
Portage13251215
Allen11913239
Richland11605211
Miami10849225
Wayne9141223
Columbiana9032230
Muskingum8906135
Pickaway8663122
Tuscarawas8649250
Marion8642138
Erie8056165
Ashtabula7160179
Hancock6998132
Ross6944161
Geauga6838151
Scioto6534106
Belmont6157174
Union584549
Lawrence5731102
Jefferson5678158
Huron5546122
Sandusky5442126
Darke5420129
Seneca5348128
Washington5319109
Athens523960
Auglaize502187
Mercer487385
Shelby476895
Knox4571112
Madison444266
Ashland435797
Putnam4336103
Defiance432399
Fulton432074
Crawford4037110
Brown402461
Logan387677
Preble3855105
Clinton379166
Ottawa373681
Highland359665
Williams348278
Champaign344759
Guernsey324953
Jackson318254
Perry297350
Morrow291840
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Hardin275265
Henry273467
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Van Wert247264
Adams243256
Pike242835
Gallia240650
Wyandot234556
Hocking220563
Carroll197348
Paulding176542
Meigs148440
Monroe136344
Noble136239
Harrison114138
Morgan109624
Vinton85517
Unassigned03
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