The brokerage firm sees 30% downside for Tesla stock
Tesla Inc (NASDAQ:TSLA) stock is down 1.6% this morning to trade at $226.43, in reaction to a scathing bear note from Goldman Sachs. The brokerage firm slashed its TSLA price target to $158 from $200 -- a 30% discount to last night's close -- saying, "a downward path for shares will resume as it becomes more clear that sustainable demand for the company’s current products are below expectations." Goldman maintained its "sell" rating on Tesla stock.
Analysts are already skeptical of TSLA, with 14 of 22 covering brokerages maintaining a "hold" or "strong sell" rating on the stock. However, the average 12-month price target sits all the way up at $285.41, a 26% premium to current levels, and territory Tesla shares haven't traded in since early April.
Options traders, on the other hand, are betting on a big bounce for Tesla. The June 250 call has seen the biggest increase in open interest over the past 10 days, with more than 30,000 contracts added. Data from the major options exchanges confirms significant buy-to-open activity here, meaning speculators are anticipating a move above $250 by July options expiration.
Some of the activity at this out-of-the-money call could be at the hands of shorts guarding their bearish bets against any upside risk. Short interest on TSLA surged 16.1% in the most recent reporting period to 43.63 million shares, representing roughly one-third of the equity's available float.
On the charts, short sellers have certainly been in the driver's seat, with Tesla stock down almost 33% year-to-date. And while the shares have come off their June 3 three-year low of $176.99, they are running into trouble at their 50-day moving average -- a trendline that's guided TSLA lower since a mid-January bear gap.