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18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
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Citi Cuts Price Target For $TSLA — Says Stock Can Hit $36 in ‘Bear Case’ Scenario

Yesterday it was Morgan Stanley, today it’s Citi. Please explain to me why these analysts feel it necessary to shill for headlines with nonsensical bear case scenario extreme price targets? Let me be clear, Citi still has a price target of $191 on TSLA, but thinks the stock can hit $36 if everything goes wrong.

I think Citi has a greater chance of going to zero than TSLA to $36. After all, should we get another credit crisis and Citi is forced to mark down assets to extremely low levels, they probably won’t have enough capital to remain solvent.

Here are the notes.

Source: CNBC

Morgan Stanley caused a stir on Tuesday when star auto analyst Adam Jonas put out a “bear case” scenario that envisioned Tesla’s shares plummeting to just $10.

And now a Citigroup Global Markets analyst is out with another shocking scenario for Elon Musk’s electric car maker.

Citi’s Itay Michaeli sees increasing probability the shares plummet more than 80% to $36.

“Maintain sell/high risk as the risk/reward still appears negatively skewed despite the recent capital raise and stock pullback, mainly on lingering demand/FCF (free cash flow) concerns,” the analyst said in a note late Tuesday.

“Reducing estimates to reflect the recent capital raise, Q1 results/guide and our own inputs.”

The analyst cut his regular price target on Tesla to $191 from $238 by adjusting the probabilities of three scenarios, seeing a decreasing chance of a big rally in the stock and an increasing chance of a share collapse. He sees a 40% chance (up from 35%) of a “full bear” scenario of $36, a 55% chance of a “moderate bull” scenario of $253 and a 5% chance (down from 10%) of a “full bull case” of $760.

“So the recent reported internal memo, which seemingly called into question prior guidance, didn’t help the risk/reward calculus. The implications can be serious, since an automaker’s balance sheet is always subject to the confidence ‘spiral’ risk,” Michaeli said.

Don’t worry TSLA longs — there is still a 5% chance the stock can hit $760.

TSLA is -3% in pre-market.

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12 comments

  1. ericbakerbruce
    ericbakerbruce

    Igor Sikorsky believed in the 1940’s that everyone would be flying his helicopters to work. He was way off on that one, but he built a very successful company which became part of the military industrial complex via UTX and now Lockheed. Musk builds fast scooters that suck in cold weather (half of the US has harsh, cold winters). They also seem to spontaneously combust. They’re expensive and the range on a full charge is not very far. Too much planning to take a trip in a Tesla….where do I charge? I drove a friends, it’s pretty nice, but I’ll buy a helicopter before I buy a Tesla.

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    • ericbakerbruce
      ericbakerbruce

      That said, the CH-53 killed more Marines in Vietnam than the Vietcong.

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  2. wingstradamus

    $724 margin for error? That’s why he’s paid the big bucks to make these bold notes. .. Honey, Ill be home sometime between today and next week!

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  3. metalleg

    It’s clear why both MS and C are putting out fake news. They want more shares and they want them from suckers who believe fake news.

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  4. tmmdn0

    Actually, there is only a 2.91% chance that TSLA will make it to $510 by Jan 2021 op ex.
    Sorry TSLA longs.

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  5. WrongView

    For the same reason you do, although to a much, much smaller audience.

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  6. drhugh2thdr

    Seriously Fly- this company is a dumpster fire

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    • numbersgame

      Yes, but the real question is what would it take for Musk-eteers to lose faith?

      On a different note, that wasn’t a Bear call. Expected value of TSLA stock:

      0.40*$36 + 0.55*$253 + 0.05*$760 = $191.55,

      which is pretty close to the present price. Also note that Citi is predicting that there is a 60% chance the stock will gain at least 20%.

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      • numbersgame

        Target price cut: 0.05*(36-760) = -$36.20 (down from $227.75)

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  7. numbersgame

    “It’s simple really. TSLA is cash flow positive because it’s “cheap” car is selling at $50k. There is no mass market for the Model 3 at that price, which means no volume.
    I will also add that the charts seem to show resistance + bullish exhaustion at $370 which is also near the ATH, so it’s a good entry point. ”
    – numbergsame, Dec 12, 2018, 1-day before TSLA peaked

    “Your TSLA bear thesis is as retarded as your market calls.”
    – Fly, in response

    “This is a battle the bears on TSLAQ cannot win”
    – Fly, 4 weeks ago, TSLA near $260

    “You’re goign to be eating your words, Fly. I’m bookmarking this. TSLA has a huge support multi-year support line at $250. If it fails, this stock will drop QUICK.”
    – numbersgame, in response

    https://ibankcoin.com/flyblog/2018/12/12/bought-bell-god-mercy-soul/#comment-556389
    https://ibankcoin.com/flyblog/2019/04/24/tesla-misses-earnings-stock-unch-bears-eternally-btfo/

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  8. chuck bennett

    I love broken clocks , almost as funny as loser who jerk themselves off when they are right about something.

    Congratulations

    Regard,

    Chuck Bennett

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    • numbersgame

      So if I’m a loser for boasting, what does that make Fly?

      Maybe if you ask nicely, Fly will let you off your knees. Just wipe your mouth first so people don’t stare.

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