It looks like it'll be another stormy day in Longsville.
The Tesla "pain trade" continues, as yet another notable Tesla bull is capitulating. Following in the footsteps of Wedbush, Morgan Stanley and Citibank, all of whom offered dismal outlooks and price targets for Tesla in the past few days, Gene Munster of Loup Ventures, who has been defending the company non-stop over the last several years, has now issued a stern warning that he believes Tesla will miss its 2019 delivery target range, according to Bloomberg.
Munster cited shrinking sales in China and the ongoing trade war as the reason for his increasingly bearish commentary.
Munster cut his estimate for Tesla's full year global car sales by about 10%, to 310,000 vehicles, versus the 360,000 vehicle target that the company put out back in March. Tesla shares are again lower in the pre-market session, trading below $185 for the first time since 2016, and poised to post their seventh straight day of losses. Tesla is down 27% over the last month and anyone who bought stock in the company's recent equity offering is now suffering major losses.
“We are lowering our numbers as a precautionary measure related to two unknowns, including China’s probable imposition of tariffs on Tesla car imports as well as other impediments such as new regulations on sales or a potential consumer boycott of U.S. goods."
Loup’s pessimism on the import fees is a “minority view,” he said, that discounts most investors’ expectations that Tesla will remain exempt because of its investment in a Chinese battery factory, according to Munster. Munster's comments follow Morgan Stanley's investor call yesterday, where another former bull – Adam Jonas – warned that the next major event for Tesla is a debt restructuring or bankruptcy: "Tesla's is not seen as a growth story, it's seen as a distressed credit and restructuring story."
Regardless, Munster still thinks that Tesla is going to survive, as the growing to EV market will continue to act as a tailwind. He says that the company's recent $2.4 billion financing should give them a two-year cash cushion, as long as they can exceed 300,000 vehicles per year through 2020.
Which leads to a simple question: what if they don’t?