Analysts now believe that the bullish growth that Tesla Motors Inc (NASDAQ:TSLA) has been witnessing is likely to slow down in the next few months. According to Adam Jonas, one of the most respected analysts on Tesla at Morgan Stanley, Tesla is likely to face a lot of challenges in the few coming years and this is set to dampen its growth.
Tesla has been experiencing stellar growth over the past few years. Interestingly, Jonas has been one of the many investors who have been giving a highly positive analysis of the performance of the company. However, in a recent note to investors, the analyst was meticulous in pointing out the reasons as to why he believes that the bullish growth that the company has been experiencing is nearing its end.
It is estimated that the stock price of the company is likely to reduce to $333 from the initial target of $450. What is important to note is that the estimate of the stock price of the company of $333 is still slightly higher than what has been estimated at Wall Street, as indicated by Thomson First Call.
One of the reasons as to why analysts believe that that Tesla is likely to experience a slow growth is that the new models of the company, Model X and Model 3, are likely to sell much slower than it was originally predicted. Tesla believes that it will be able to hit the target of a half a million cars by the year 2024. But it is now widely believed that the company may be able to sell only about 250,000 cars by the year 2024. The low sales target is ascribed to possible delays that the company is likely to experience in delivering the cars. Engineering complexities in the models are likely to slow down the production process and this will cause delays in delivering the models to the market.
The second reason as to why Tesla is likely to experience slow growth, according to Jonas, is associated with a stiff competition that is shaping up in the industry. The industry has attracted different outfits. Tech companies have been seeking to get a pie of the nascent industry by developing fanciful models and applications. This trend is likely to force Tesla to invest more in research and development and this will reduce its profit margins.
For now, Tesla is set to release its quarterly results on 10th of February. It remains to be seen what its CEO, Elon Musk, will have to say about its earnings prospects.
