Tesla Inc. (TSLA ) shares extended their decline to a sixth consecutive session Wednesday, losing 6% to close at $192.73 following yet another bearish note from Wall Street analysts as pressure piles on the clean-energy carmarker’s plans to turn a profit from its flagship Model 3 sedan.
Citigroup analyst Itay Michaeli cut his price target on the group by nearly 20% to $191 per share, while maintain a sell rating, citing a “negatively skewed” risk/reward scenario in the company’s near-term outlook linked to concerns over cash flow and customer demand. Michaeli said the group’s recent capital increase of $2.7 billion gives the balance sheet cushion against a 2019 downturn, but stressed the company needs to address its significant cash burn rate.
“The recent capital raise was a positive step but won’t necessarily get the balance sheet out of the woods if Tesla cannot achieve FCF targets. So the recent reported internal memo, which seemingly called into question prior guidance, didn’t help the risk/reward calculus.” Michaeli said. “The implications can be serious, since an automaker’s balance sheet is always subject to the confidence “spiral” risk.”