Tesla Stock Could Crash To $20 If Elon Musk Doesn't 'Pull It Together' — And Then There's The Disappearing Backlog, Mysterious Price Cuts

Zinger Key Points
  • Goldman Sachs and Loup Funds have acknowledged that Tesla is facing some short-term headwinds. GLJ thinks the problems run deeper.
  • "What we're finding out is Tesla is just a run-of-the-mill car company that's built more capacity than they can sell," Gordon Johnson says.

Tesla Inc TSLA shares are sliding Wednesday after Goldman Sachs cut its price target on the stock. One analyst defended the name following the call, while another slammed the Elon Musk-led company and indicated that Tesla's descent is just getting started

What To Know: Goldman Sachs maintained Tesla with a Buy rating and lowered the price target from $305 to $235, citing softer supply and demand trends. 

The firm also anticipates a sequential decline in gross margins as a result of pricing cuts from Tesla in the current quarter. 

Loup Funds' Gene Munster and GLJ Research's Gordon Johnson are well known for taking opposing views when it comes to Tesla and they did just that Wednesday morning on CNBC's "Squawk Box."

Bull Perspective: Munster, a longtime Tesla bull, acknowledged that Tesla has underperformed his expectations. The stock is down more than 50% since the start of the year, according to Benzinga Pro. He attributed the sharp declines to discounted vehicle prices and a potential Twitter distraction.

See Also: Tesla Continues To Show Weakness Heading Into FOMC: Is A Bounce On The Horizon?

"Elon is Tesla's brand. He needs to pull it together ... he needs to tighten up his message because he's gonna cause some long-term damage if he doesn't right the ship," Munster said.

Ultimately, the Loup analyst expects these headwinds to fade, similar to what Goldman said when it noted that Tesla is a long-term EV cost structure and full solution leader. 

Munster even expects Tesla to surprise some people when it turns in delivery numbers for the December quarter. Johnson, a longtime Tesla bear, stopped him right there. 

Bear Roars Back: "What we're finding out is Tesla is just a run-of-the-mill car company that's built more capacity than they can sell," Johnson said before explaining his case. 


The Tesla bear sees several red flags, including the aforementioned margin-slashing price cuts and lower lead times in the U.S. and China. It also looks like the company's backlog in Europe is going to disappear by the end of the quarter, he added. 

"They've built capacity that they can't sell despite their plants not even being fully ramped," Johnson said. 

Tesla is not a technology company, and it shouldn't be priced like one, he said, adding he expects Tesla shares to continue to face selling pressure. 

"That's why we think, by the end of next year, the stock will hit our price target of $23 per share," Gordon said.

TSLA Price Action: Tesla has a 52-week high of $402.67. The stock is making new 52-week lows on Wednesday.

Tesla shares are down 1.05% at $159.26 at the time of publication, according to Benzinga Pro.

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Posted In: Short IdeasDowngradesPrice TargetAnalyst RatingsTrading IdeasCNBCElon MuskGene MunsterGordon Johnson
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