JPMorgan (NYSE: JPM) is suggesting to investors to bet against shares of Tesla believing that the company is likely to raise more capital that will result in diluting their stock. Competition from other automakers is also likely to rise while some are seeking benefits from government subsidies.
Next year, it is believed that Tesla will face multiple obstacles due to the ramping of production of the Model 3 and the unlikeliness to meet volume targets by the end of this year. Next year will be the year that competition for electric vehicles will rise including possible tax law changes. Analysts have been increasing the short outlook throughout 2017 and suggests to sell shares at the current price and covering the sale at a later date hoping to profit as the price of Tesla shares drop.
"Tesla will face several milestones in 2018 relative to the ramping of production of the Model 3, which we believe will be difficult for the company to meet, particularly if its substantial miss to volume targets in 2017 are to be any guide," wrote analyst Ryan Brinkman.