Tesla Motors Inc (TSLA) Shares Drop 14% Due To New Goldman Sachs Price Target

Posted Jul 16, 2013

Shares of Tesla Motors Inc (NASDAQ:TSLA) has dropped over 14% today because Goldman Sachs Group set a new price target that was far below the current trading price.  In a research note on the auto sector published today, Goldman Sachs analyst Patrick Archambault offered three scenarios for Tesla and set his price target of $84 per share, which is up from the previously set $61.  He kept a “neutral” rating on the stock.

Tesla’s stock dropped $18.21 (-14.31%) to $109.05.  The price closed at $109.05 on Nasdaq.  The company’s stock quadrupled this year so far though.  Nasdaq said that Tesla shares will be listed on the Nasdaq 100 index since Oracle is moving over to the NYSE.

Here are the three scenarios that Archambault provided:

1.) Tesla Motors will sell 105,000 cars including the Model S with 14.6% operating margins and earnings of $5.99 a share.
2.) Tesla Motors will sell 150,000 cars including the Model S with 14.8% operating margins and earnings of $8.59 a share.
3.) Tesla Motors will sell 200,000 cars including the Model S with 15.2% operating margins and earnings of $11.69 a share.

Archambault said that auto stocks underperformed the S&P 500 index by an average of around 26% in the last four economic periods.  Archambault is going to focus on General Motors and Ford Motor Company.  Both of those companies have seen strong product driven growth and he rated both of those stocks as “buy.”  He sees strong near-term catalysts for GM’s shares.