Leading investment bank JP Morgan has issued a stark warning on Tesla stock, downgrading it to ‘Underweight’ and predicting a potential 60% decline from its current price. The bank’s analyst pointed to a record pile-up of unsold vehicles and intense competition in China as primary concerns. Tesla’s stock has already slumped nearly 20% year-to-date, opening Tuesday’s trading at approximately $352.
JP Morgan has painted a bearish outlook for Tesla stock, lowering its rating to ‘Underweight’. The bank’s analyst, Ryan Brinkman, warned traders to approach the equity “with a high degree of caution.”
JP Morgan predicted that Tesla stock could lose another 60% of its current value, potentially falling to the $145 range. This forecast followed Tesla’s stock opening Tuesday’s trading at $352, having slumped nearly 20% year-to-date.
The bank cited weak first-quarter deliveries, where the company sold 358,000 vehicles, 4% less than the estimated 385,000. “Record surge in unsold vehicles adds to free cash flow woes,” Brinkman wrote in a client note.
Tesla produced 50,000 more cars than it sold last quarter, creating an inventory backlog. Clearing this inventory may require further discounts, which would pressure the company’s profits.
Competition from China’s BYD is also intensifying in the EV sector. These combined factors are currently weighing heavily on Tesla’s stock performance in the market.
