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Jp morgan chase analyst believes that tesla stock is absolutely gonna crash through the floor for the remainder of the year this guy believes that tesla stock will go down over 40 percent over the course of the next five months yes over 40 percent crash in the next five months guys we were talking massive so we’re gonna look at what he has to say okay and then

I’m gonna bring out two points okay one more on the fundamental side and one more on the technical side on how you could actually get a stock to go down that much okay and we’re look at this and how much of a realistic possibility it is out there everything in the stock market is possible at some point in time right everything is possible but how realistic is this

That’s what we’re gonna look at so hope you guys really enjoy a hit thumbs up if you enjoy let’s get in this so jp morgan look at the headline jp morgan predicts tesla shares will plunge more than 40% before end of the year all right tesla shares will fall dramatically the rest of this year due to its high valuation and rising competition accord in jp morgan the

Firm reaffirmed its underweight rating on tesla shares saying other automakers may price their electric cars aggressively all right they’re gonna price our electric cars aggressively the other guys competing in the space also has a highly differentiated business model appealing product portfolio in leading-edge technology which we believe are more than offset by

Above-average execution risk and valuation that seems to be pricing in a lot analyst ryan brink mark said in a note to clients on friday we have highlighted more concerns regarding increased competition including from automakers looking to use a sale of battery electric vehicles to subsidize their more lucrative internal combustion engine portfolio vehicles from a

Legal regulatory and compliance perspective rather than trying to generate profit on the sale of these battery electric vehicles in of themselves ravemon reaffirmed his hundred and eighty dollar december 2018 price target for tesla shares representing 44 percent downside from thursday’s clothes 44 percent downside okay and by december he thinks this is going to 180

By december okay that would be quite a substantial move down there analyst is cautious on the company’s second quarter financial results it is slated to report its june quarter results on august 1st according to this website tesla said on july 2nd that it had reached a one-week production goal of 5000 model 3 cars during the last week of june this is coming from

The analyst now we continue to be concerned that the free cash flow has a potential to be a larger outflow given the fact that the much-heralded production rate improvement he said additionally we worry about margin given the potential for overtime premium freight and other expenses employed to ramp production in a seemingly inefficient manner he says tesla didn’t

Respond to comment okay so what i want to talk about now is i want to talk about the fundamental point he brings out and then i want to talk about like a 40 plus percent downside move in five months like how real is realistic is that like how could that potentially happen okay so in the simplest terms he believes that tesla tesla demand will fall because other guys

Okay the competitors compete on a will compete on price okay and they’ll be willing to lose more and more money on their cars which will make their sales go up which will make the tesla sales go down that’s the simplest point he brings out okay that’s his fundamental point now we’re gonna keep a few things in mind with this okay the first is the the competition

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The the if you want to call them that the other players in this game they’re all already losing lots of money on electric vehicles okay so they’re already taking big losses in this game all right they’re all taking big losses as of now also we know they have hardly any demand for instance the chevy bolt which was supposed to be the tesla killer is being outsold

About 6 to 1 in north america by the tesla model 3 and then model 3 hasn’t even ramped in a major way yet okay and they’re already being outsold by about a 6 to 1 margin alright so that’s a massive massive massive difference there ok so these guys are already taking big outs how much money are they willing to lose per car are they willing to lose 10,000 per car

Are they willing to lose 20,000 perk okay these losses are getting big for the companies and if their demand starts going up and they’re taking these massive losses eventually i’ll start affecting their actual numbers so that the these companies report okay if their sales were to actually go up because of this all right think about this from a perspective of these

Companies refuse to really get on the electric wave and take electric vehicles in autonomous driving seriously up until the last like year okay most of these guys have been laggards you know when tesla was focused on the stuff for the last 5-10 years these guys have just started getting focused in the last year or two so you’re gonna tell me these guys that have

Pretty much no long-term vision to their businesses or all the sudden gonna get a super great long-term vision and be willing to take ten twenty thousand dollar losses each car sold i’m not convinced to that okay also that’s not even the biggest point that’s just one of the points okay tesla the fact is tesla demand is through the roof okay we know that there’s no

Question about that here’s the thing okay just because a competitor wants to lower prices on whatever they’re selling does not mean the demand for someone else is gonna fall okay if my ipad breaks right now if my ipad breaks right now i’ll be down to the apple store within an hour or i’ll order one online within an hour okay i’ll order a new ipad within an hour

Think about that from the perspective there are there are hundreds hundreds of companies that make a tablet of some kind the majority of which are far cheaper than this ipad right here i’m not gonna go in some other crappy tablet some android tablet or whatever and be like oh i can save some money here no i’m going to get my ipad if my iphone breaks i’m going to

The apple store and getting a new iphone right now okay when i go i go to in-n-out burger okay you know how many discount burger places i passed i passed at least one mcdonald’s on the way there i passed burger king i passed wendy’s i passed jack in the crack i passed so many burger places on the way to in and out and they all have burgers that are cheaper than in

And out i want in and out man i want in and out if you want something if you want something you’re gonna get it okay if there’s the demand out there for a product people are gonna pay up for that product okay if there’s demand for it doesn’t matter if it’s an iphone a car anything across the board if people are willing to pay up for it it’s because it’s a better

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Product in the end okay so until the competitors come out with the product that’s any and that’s even close to you know as competitive as the the model three is in terms of looks in terms of style in terms of interior in terms of everything you can go into across the board okay that excites somebody about a model three versus a chevy volt which my goodness you

Couldn’t catch me dead in one of those cars hey all if you did see me in one of those it’s probably because i’m dead because i would never drive a chevy volt like holy smokes like i’m sorry if you drive a chevy bullet like i straight-up feel bad for you man that’s very disappointing so that’s the first point that’s the fundamental case right there now this guy’s

Talking about forty percent cost downward move for the stock over the next you know let’s say five months okay five months and we’re talking about a forty percent plus downward move wow wow that would be a big move so you ever need two things to happen okay you need buyers to dry up in a real way i’m talking about buyers for tesla stock okay so you would need you

Know people just to not be interested in test of stock buying more shares of tesla stock all right which is a pretty hard thing because we threw out tesla’s history that there’s never been buyers that have dried up like there’s always more and more people investing more and more money and i’m what i’m talking about now i’m gonna just talking about the retail inside

The average investor i’m talking about big fund managers all right so to get all the buyers to say oh we’re not interested in buying tesla shares anymore you know it’s possible but it’s pretty unlikely the more even more unlikely thing if you’re gonna get a forty percent plus drop in a sock in a very short amount of time like that five months you’re gonna need huge

Huge investors to sell off their shares what this is possible but here’s the thing why would a huge investors sell off their shares okay people are invested in this company because they believe they’re gonna be huge in auto and autos and they’re gonna be huge in energy okay and given and what why would anybody sell out of tesla shares if you’re in the stock for

The long term like like why like okay let’s say let’s say they’re not able to keep a 5,000 production iranian goes down to 4,000 like you think that’s gonna magically make all these big fund managers that are super bullish on the stock be like oh they didn’t quite hit that number there so we don’t want to own the stock anymore no these guys and these guys gals

That have invested hundreds of millions of dollars or even billions of dollars into the company they’re playing this for a long-term out future okay they were playing this it for a long time in the future they’re not just like trying to trade it around and be like oh they missed that number over there let’s just sell the stock off okay so all things are possible

In the stock market can a stock go down 40% in five months yeah seen it done a ton of stock before but is it the most realistic thing i would say probably not okay probably not you’re gonna need buyers to dry up for tesla stock in you’re gonna need mass selling from institutions and huge fund managers and whatnot and why they would just be willing to sell out of

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Their shares wouldn’t make much sense to me at that point in time okay you have a lot of demand for tesla shares so if it was to even go down under 300 what we have seen is the that it just you know goes right back up over 300 okay as soon as it drops down it just goes back up these type of stocks have long-term plays it’s hard to get them down okay which is the

Same reason i won’t short some of these other companies that i’ve talked about in the past that i believe are overvalued a lot of these companies i won’t dare short them because it’s so hard to get their stock prices down because there’s so much belief from big fund managers out there that these companies are gonna be huge in the future that they don’t care about

Short term results netflix netflix missed by you know 50 percent on what their subscriber number is gonna be in north america based upon that number the stocks should’ve been down 20 plus percent the next day the stock fell five percent okay it fell five percent and then on a day when i probably should have been like i haven’t seen a miss that bad in a long long

Time in the stock market they missed by 50 percent on the subscriber number and they missed bad internationally i’ve been a long long time since i seen a number that bad in this talk fell five percent okay only five percent that’s like hardly anything okay so these type of stocks that have huge growth potential in the future they’re hard stocks to get them to

Go down in a major way it’s possible is possible anything out there is possible i’m just saying it’s it’s pretty unrealistic you need buyers dry up and and like like like the fundamental case oh chevy bolt let’s say they drop their price or whatever competitors are out there right they drop their price what’s gonna make somebody go get that car you know what i

Mean like like like it announced pact every damn day okay that drive through is like i along and i gotta wait and the wendy’s drive-through is is available right and the burger kings got nobody in and the jacket the cracks got nobody in and i could just go right up there and get a burger for cheaper i go in and help man it’s a it’s a supply and demand economy and

Sometimes i think these analysts forget about the supply in the demand and when a company has a demand it’s hard to beat em man ask the guys that compete against apple how many guys have come in know they’re gonna be the apple killer they’re gonna be the iphone killer anybody has fold electronics and technology in the last decade there was a to have a dollar for

Every time i saw a read an article in my life that so this is iphone killer this is ipad killer this is a mac killer and whatever then it up happening all apple did was grow and grow and grow and get bigger and bigger like it is one of this guys it’s all about way that demands at and i always hope you guys enjoy this i want to know your opinion in that comment

Section do you believe this stock will fall 40% over the next five months do you believe it will rise 40% do you believe it will be a stagnant stock i would love to hear from you guys as always in that comment section thank you for watching have a great day

Transcribed from video
JPMorgan "TESLA STOCK WILL CRASH VERY SOON" By Financial Education

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