BARCLAYS: We’re still waiting on Tesla’s 'iPhone moment' (TSLA)

pulse

October 9, 2017 4:32 PM

Many investors are either hardline bulls or bears on Tesla — but the price will be decided by those in the middle who'll be forced to pick a side.

Delayed Model 3 deliveries and a behind schedule electric semi truck have pushed shares of Tesla down almost 9% since the middle of September.

That drop, coupled with other hiccups in September, has already netted short sellers a cool $160 million — and there could be more opportunity for traders to bet against the stock, according to Barclays.

In a note to clients Monday, the investment bank said hype around Tesla’s Semi "is at least a short-term trading opportunity to ride Tesla down," and that any possible "iPhone moment" investors were waiting for "appears less certain."

"With the hype cycle around Tesla Semi delayed for another month, we expect the stock to come under pressure in the short term, while looking for any larger break in investor confidence that could lead the shares closer to our $210 price target," said analyst Brian Johnson in a note.

Bloomberg data shows his $210 price target for Tesla shares is well below the Wall Street consensus of $340, and that he is one of the most bearish analysts surveyed.

The true test of Tesla’s stock price will occur in the coming weeks, before the company's November 19 big-rig announcement, when a middle segment of investors — coined "purple pillers” by the bank — may lose confidence and be swayed to the bear side.

"Purple pillers are a more realistic crowd – and generally don’t believe the blue-sky Tesla scenarios proposed by blue pillers (in which Tesla will sell several million units a year, while also leading in other business opportunities – e.g. battery storage)," Johnson wrote. "However, they recognize that Tesla stock is driven by a substantial number of uber-bull investors who believe in these scenarios."

"So when faced with challenges to the veracity of the ramp - often encapsulated in tweets, as opposed to the more conservatively written and compliance/legal friendly versions of the quarterly shareholder letters - there could be some loss in confidence," Johnson says.

Despite the brief drops, shares of Tesla have gained 74% over the last year.