Tesla Fated For Similar Downfall As Tilray, Stock To Hit $60-$80 Levels In 2021, Says Long-Term Bear
What Happened: Johnson placed the fair value for Tesla at around $60 to $80. “We think it’s gonna head there. We think it happens next year.”
The Elon Musk-led company’s shares may have soared 657% on a year-to-date basis but post the automaker’s inclusion in the S&P500 on Dec. 21, the upward movement may come to a halt, as per Johnson.
The analyst also touched on other factors such as loss of government-backed-EV credits from rival automakers and falling market share in China and Europe as negatives.
Johnson bolstered his thesis with examples from the past and equated Tesla with cannabis company Tilray Inc (NASDAQ:TLRY) whose shares touched $150 levels in 2018 but as of press time were priced at $7.87.
See Also: Aphria, Tilray In Talks To Merge: Report
“You’ve seen this before. I know it sounds crazy, look at Tilray, look at SunEdison, look at Suntech, some of these stocks, they went from $5 to $300 dollars, back to $5. They went from $2 to $300 back to zero,” Johnson told Yahoo Finance.
The analyst claimed that Tesla was a “prime candidate” for a similar price movement.
Why It Matters: Johnson said Tesla is facing demand issues and pointed to the company offering free Supercharging and cutting prices on their Germany inventory as indicators of the automaker trying to “push through demand.”
Johnson said that the increased sales in China were enabled due to an 8% price cut at the beginning of October.
“But the problem is that price cut was enabled by changing technology,” claimed Johnson. “[Lithium Ferrophosphate] batteries, which are now being widely reported in China to only get 50% of the range in the winter.”
The analyst questioned if Tesla would be able to continue to sell that amount of cars in China now that people are seeing that the range is “only half of what’s promised.”
Tesla’s dizzying valuation — with the company’s shares shooting up 783% over 12 months — has left analysts divided with some issuing downgrades and others seeing more upside.
Price Action: Tesla shares closed nearly 1% lower at $633.25 on Tuesday and fell 0.92% in the after-hours session.
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