Citi Downgrades Tesla Motors (TSLA) to Sell; 'SEC Action Raises Risk of a Spiral'

September 28, 2018 6:51 AM EDT
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Price: $589.72 +3.15%

Rating Summary:
    21 Buy, 21 Hold, 11 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 4 | New: 24
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(Updated - September 28, 2018 7:11 AM EDT)

(updated to add analyst comment)

Citi analyst Itay Michaeli downgraded Tesla Motors (NASDAQ: TSLA) from Neutral to Sell. The price target was cut from $356 to $225.

The analyst sees two potential outcomes:

  1. CEO Elon Musk exists or
  2. Musk remains after settling or prevailing on the SEC charges.

The analyst see little reasons to not believe the equity valuation would take a hit should Musk resign. Should that happen, there is increasing risk of a triggering on downward confidence which would create a spiral that TSLA management would want to avoid.

Michaeli says a downward spiral is difficult to quantify in terms of risk and believes that the pull-back after Thursday's close is still not enough as the risk/reward remains negatively skewed.

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $274.17 yesterday.

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