Elon Musk is often celebrated for his entrepreneurial vision, whether daring to create an electric car for the masses, building a high-speed underground transport system or helping pioneer commercial space travel. Wall Street, by contrast, would simply love it if the Tesla CEO tethered his ambitions to good old planet earth -- like making money.
Shares of Tesla fell to their lowest level in more than two years on Monday after a prominent stock analyst questioned whether the car maker would succeed in turning a profit later this year, as Musk until recently had expected. Wedbush analyst Dan Ives said the company is under pressure to rein in expenses amid weakening demand for the company's flagship Model 3, saying that "We continue to have major concerns around the trajectory of Tesla's growth prospects." He also questioned Musk's forays into areas like robotaxis and other "sci-fi projects," urging the company to focus on its core business.
Ives, who has been generally bullish on Tesla's future, likened the scenario to a "red-code situation" and cut his price target on Tesla's stock to $230 a share, from $275. The shares on Monday dipped below $200 for the first time since 2016 before bouncing back above that threshold in afternoon trading. The stock is down more than 26% on the year, reflecting investor concerns about Model 3 sales and whether Tesla is adequately capitalized.
Musk last week reportedly emailed workers that he and Chief Financial Officer Zachary Kirkorn, who joined Tesla in March, would be personally reviewing expenditures after a larger-than-expected loss in the first quarter.
Tesla had previously forecast sales of 360,000 to 400,000 Model 3 cars, which the company is counting on to crack the mainstream global auto market. But Ives said that reaching that target is likely to prove a "Herculean task," while noting that the company's longer term production targets are attainable.
Tesla did not immediately respond to a request for comment.
The company is also facing additional safety questions about its technology after at least the third fatal collision in the U.S. involving Tesla's advanced driver-assistance features. The National Transportation Safety Board four days ago found a Model 3's autopilot system was active when it hit a tractor-trailer in a deadly crash in March.