Tesla’s Stock Will Plunge 27 Percent Within the Next Year, Analyst Says

Is Tesla overvalued? Or does its stock price have nowhere to go but up?

byEric Brandt| UPDATED Sep 19, 2017 2:21 PM
Tesla’s Stock Will Plunge 27 Percent Within the Next Year, Analyst Says

Tesla’s stock price has famously been going gangbusters, but at least one Wall Street analyst thinks its party will be over soon. 

According to CNBC, the most recent speculation comes from Jefferies analyst Philippe Houchois, who encouraged his clients to dump their Tesla shares within the next year.

"It is with a bit of a heavy heart that we initiate coverage of Tesla at underperform," Houchois wrote in a research note. "Achievements to date and vision are impressive, but we don't think Tesla's vertically integrated business model can be scaled up as profitably and quickly as consensus thinks and valuation multiples imply," he wrote.

To put it simply, Houchois believes that Tesla shares are overvalued and that the market is going to fix that. Specifically, Houchois expects Tesla's stock will decline by 27 percent to $280 per share in 12 months.

"We appreciate the growth upside from a brand whose reach goes well beyond auto markets and that valuing Tesla today assumes some form of 'steady-state' that is unlikely to happen anytime soon," the analyst wrote.

There’s still some optimism about Tesla as a brand in Houchois’ notes. This potential steep decline isn’t being predicted by someone who just doesn’t like Tesla, but rather by someone who both knows the market and appears to be a strong supporter of the brand. That’s a sign that it might finally be time for Elon Musk to be worried about Tesla's future.