A lot of people have a lot of opinions about Tesla (TSLA +0.91%) stock -- which might be the understatement of the century. According to TipRanks.com, 40 analysts who follow Tesla value it at anywhere from $350 to under $23 per share, making it difficult for investors to know which price is "right."
Tiny stock shop GLJ Research has (and always has had) the lowest price target for Tesla. But with Tesla steadily cutting prices amid slowing sales of its electric cars, low-ball estimates have accumulated. Today, the third most pessimistic price target comes from one of the biggest names on Wall Street.
JPMorgan analyst Ryan Brinkman thinks Tesla stock is worth just $115 a share and he rates it a sell. That 12-month price target implies a 23% downside.
NASDAQ: TSLA
Key Data Points
Is Tesla stock a sell?
Why does Brinkman believe you should sell Tesla stock now? Tesla's announced plans to lay off 10% of its workforce made it clear that Tesla selling 8.5% fewer cars last quarter year over year was because of weak demand for electric cars, not because of any constraints on Tesla's ability to build cars fast enough.
Up until now, this was debatable. Tesla did suffer an arson attack, and it had parts shortages in Germany after Houthi pirates began impeding sea traffic through the Suez Canal. That might have explained the slow sales in Q1. But with supply lines back in place today, the only logical reason for laying off workers globally is if Tesla has more workers than it needs, to build the few cars it expects to sell in the future.
Hence the layoffs.
Now, this might change. Analysts who follow Tesla stock also estimate sales will double (to almost $200 billion), and earnings will nearly double (to more than $25 billion annually) over the next five years. But if Brinkman is right and Tesla's "hypergrowth narrative" has been debunked by the layoffs, then there's reason to doubt those predictions.
At more than 50x forward earnings, with a 20% projected long-term growth rate, Tesla stock might be a sell.
