Tesla (NASDAQ: TSLA) stock fell for a third straight day on Tuesday, down 4.1% through 10 a.m. ET on a Wall Street downgrade and discouraging commentary from electric vehicle (EV) news source Electrek.
Long-time Tesla bear GLJ Research announced a "Street-low" price target on Tesla stock today, saying the $155 stock is worth less than $23 a share. At the same time, Electrek reported that regardless of what Elon Musk says, Reuters was right when it reported that Tesla is canceling the Model 2.
What's up with Tesla's cheap Model 2 EV?
You know the story. Early in April, Reuters reported that Tesla "canceled" plans to build the inexpensive electric car commonly called the "Model 2." With characteristic subtlety, Musk disputed the report:
Reuters is lying (again)
-- Elon Musk (@elonmusk) April 5, 2024
But now, Electrek is backing up Reuters' report -- mostly.
The Model 2, says Electrek, has indeed been "effectively scratched" and "completely defunded." Instead of the Model 2, Tesla is going all-in on its "robotaxi" self-driving car, pouring resources into building a "giant data center" to support robotaxi operations.
Is Tesla stock a sell?
You can argue all day over whether "effectively scratched" and "completely defunded" equals "canceled." (Musk might still decide to build Model 2 after robotaxi, after all, or even change his mind entirely tomorrow!) In the end, though, Reuters was right in its reporting, and Elon Musk's credibility took another hit today.
It doesn't help that in addition to the Electrek story, Tuesday saw GLJ Research slap a two-digit price target on Tesla stock, predicting (in effect) that it will drop 85% in the next 12 months as the company keeps slowing production and slashing prices.
Personally, I don't buy GLJ's prediction. The last time Tesla was priced near $23 a share, it was because the company was losing money. While business isn't great right now, most analysts agree Tesla will still earn more than $8 billion this year. It's hard to call a stock like that a sell.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
