Negative long-term drivers could send Tesla shares down to $200, Morgan Stanley warns.
Tesla's stock is in for a bumpy ride in 2018 as the company faces serious headwinds that could send the stock sharply lower, Adam Jonas, an analyst at Morgan Stanley, wrote in a note to clients.
He anticipates the stock can climb as high as $400 a share next year, from its current stock price of $315, before crashing as much as 50% to $200 if it can't overcome certain challenges in the longer term.
"Following a hypothetical [first half of 2018] pop in the share price, we could see scope for longer-term risks in the story to come to the fore," Jonas wrote.
Jonas said that Tesla's target global market may not be as accessible as the market thinks and increasing competition from consumer electric and mega-tech giants could challenge its autonomous transport systems.
Though he admits that he can't precisely predict the timing of when the stock will fall, Jonas did say that there were some positive drivers of Tesla's stock in the short term, including a quicker-than-expected resolution to its production bottlenecks, a highly favorable working capital arrangement, and the willingness of suppliers to flexibly work with the automaker.
The company's increasing challenge to reach a captivated market and to thwart encroachment from competitors could "stunt the enthusiasm" for Tesla's stock, even after it overcomes its Model 3 production hurdles.
Tesla's stock is trading higher by 2.45% at $316.29 on Wednesday, and is up 46.92% for the year.