Tesla to Fall 30% in 6 Months on Rising Competition: Goldman

The Tesla Inc. (TSLA) bears are out with another report on Tuesday morning, warning investors that shares of the electric vehicle industry pioneer could lose more than 30% of their value, citing increased competition in the next-gen auto industry and margin pressure. 

(See also: Investor Says Tesla Could Skyrocket to $4,000.)

'Medium to Longer Term Industry Backdrop Challenging for Tesla's Products'

Goldman Sachs reinstated coverage of Tesla stock with a sell rating and a six-month price target of $210, 30% downside from Friday's closing price. In August, the investment bank suspended its coverage on the auto stock after announcing it was serving as a financial advisor "in connection with a matter that is fundamental" to Tesla. The decision came after Chief Executive Officer (CEO) and founder Elon Musk took to Twitter indicating that the Palo Alto, Calif.-based company was weighing a take private deal. Later, Musk said that the firm will remain public, while some speculated that the groundwork for a deal never existed. 

Analyst David Tamberrino expects Tesla to feel pressure on its lead in the EV space as competition ramps up over the next several years from players including luxury carmakers Audi, BMW Jaguar, and Porsche.

"We see the medium-to-longer term industry backdrop as challenging for Tesla's products; this follows from an increasing number of EV launches from both traditional OEMs and other start-up competitors — at a time when the company's product cadence hits a gap," wrote Tamberrino. He expects a "large crescendo" of EV launches from traditional and new entrants alike in the early to mid-2020's, driven by regional mandates and tightening CO2 standards.  

"Altogether, we remain bearish on the company's ability to execute, achieve its targeted production ramp/margins, and sustain FCF [free cash flow] generation," added Goldman. 

Tesla shares are down about 2.5% on Tuesday morning at $294.06, representing a 5.6% decline year-to-date (YTD) compared to the S&P 500's 8% return over the same period. 

(See also: Tesla's True Value ‘Closer to $200’ Says Needham.)

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