Tesla Stock Continue to Slide on Investor Worries

Shares in Tesla Inc. have plunged 45% since mid-December, mainly because of investor concerns about the level of demand for its critically important Model 3 electric sedan.

Today, Morgan Stanley lowered its worst-case forecast for Tesla shares to a remarkably low $10. The firm cites Tesla’s rising debt load and trade uncertainties that could dry up demand in China. But the assessment also cites Tesla’s strategic value and “extremely high” technical competency. It predicts the carmaker would take steps to avoid collapse.

Tesla’s shares were trading below $204 at midday today compared with a peak of nearly $377 in mid-December. The company has stumbled repeatedly in its launch of the $39,900 Model 3, whose success is considered critical to the company’s ability to turn a profit.

Last month Tesla reported that its revenue skidded 41% from the fourth quarter of 2018 to the first quarter of 2019. Distribution problems in China and Europe cut unit deliveries 31%.

Investors also are worried about Tesla’s ability to turn a profit after the company lopped $2,000 off the price of all its EVs in January. The move was intended to bolster demand as federal tax credits worth $7,500 began to shrink because the company had surpassed the program’s 200,000-unit cap.

CEO Elon Musk has predicted that Tesla’s overall vehicle sales will reach at least 360,000 units this year from 245,200 in 2018. But deliveries in the first quarter of 2019 fell 37% below the previous quarter’s volume.