Tesla shares fall after analyst cites distractions from Elon Musk's 'sci-fi projects' - CNBC

Tesla Chief Executive Office Elon Musk speaks at his company's factory in Fremont, California.

Noah Berger | Reuters

Wedbush cut its price target on Tesla shares to $230 from $275 on Monday, citing "major concerns" about the growth plan of Elon Musk's electric vehicle company, as well as U.S. demand for the key Model 3.

"With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser focused on shoring up core demand for Model 3 and simplifying its business model and expense structure in our opinion with headwinds abound," Wedbush analyst Daniel Ives said in a note to investors.

Ives said Tesla's ability to reach its end-of-the-year production forecast will be "a Herculean task." The company forecast it will produce 360,000 to 400,000 vehicles by year-end. Ives estimates a "best case scenario" of 360,000 to 370,000 vehicles, although 340,000 to 355,000 is the more "likely path given the current tea leaves in the field around demand."

"Tesla is facing a quagmire as the company is in the midst of building out its next flagship factory in Shanghai with Giga 3, in the early stages of tooling/blueprinting its next Model Y for production slated for 2020, and ramping production of its mid-range and base Model 3 in the US, all while facing a growing cash crunch and high expense structure issue," Ives added.

Tesla shares fell 4% in premarket trading from Friday's close of $211.03 a share. Wedbush has a neutral rating on the stock.

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