Is Tesla Stock Running on an Empty?

Tesla's presence in the electric car market has been, for a long time now, one of the biggest around. Tesla's Powerwall battery system has given some homeowners new hope that they too can generate power at home, no longer beholden to a faceless power company to keep them from living in the Bronze Age. Yet the shadow of skepticism is now awakened, and a new report from Credit Suisse analyst Dan Levy suggests that Tesla stock may see a 40 percent dive in the quarters ahead.

Top of the World, For Now

Right now, Tesla stock is the king of the stock market when it comes to electric vehicles, and with good reason. When it comes to the US electric vehicle market, Tesla holds 80 percent market share. The Model 3 is, effectively, the electric car to own throughout the US, and when you've got that kind of market share behind you you've pretty much won. It's a recipe for profitability in the billions, especially if the electric car market starts to expand.

However, as analyst Dan Levy pointed out in an investors' note, Tesla's market dominance may not last much longer. After the fourth quarter, the market floodgates are expected to open as Ford brings out a new electric vehicle of its own sometime in 2020 that will pose what level calls “a true competitive threat” to the Model 3, Tesla's flagship.

Essentially, analyst Levy points out, Tesla is top of the market heap right now, but may not be so much longer. It has a “...window of opportunity now with a clear competitive lead,” but if it hopes to hold that primacy after the fourth quarter, and make any kind of sales push, it's going to have to take advantage of the window it's got to move.

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A Target on its Back

Credit Suisse has been covering Tesla stock since June of 2019, and came out immediately with a $200 per share price target. Sounds great, until you realize that Tesla stock most recently closed at $346.11. So if Tesla achieves that price target, that's a loss of roughly 42.3 percent of the stock's value.

Tesla's efforts in the market have also proven to have some hiccups along the way. Sales haven't exactly been the most stellar, and Tesla's grasp on the brass tacks of the market—including things like manufacturing and after-sales service—hasn't been the most solid.

Worse yet, Tesla has been focusing on providing the sporty electric vehicle alternative; Tesla's Model 3 is perhaps the closest to a standard sedan in looks around, and products like the Model S and Model X provide an almost sci-fi look to them. Ford, meanwhile, is about to boast an electric SUV in the Mach-E, which is said to be inspired by the Mustang. Given buyers' increased interest in SUVs—particularly in the winter-heavy northern United States—an electric SUV that can handle slick roads and snowbanks might be just what the market ordered.

Is Tesla Stock Still a Buy?

Those wondering if Tesla is a buy or sell may be getting concerned now. A 42 percent drop in share prices isn't exactly how you fund a retirement, so much as how you fund an afternoon of slot machine play. There are some points to consider that may help here; Ford's upcoming Mach-E release is poised to sell between $40,000 and $50,000 per, which compares unfavorably to the Tesla price starting at $35,000. Throw in slightly improved range for the Model 3 at 325 miles compared to the Mach-E's 300 and there's an edge there too.