Tesla's may be a great ride, but its stock has gone about as far is it should go, say the analysts at one investment house. (The stock was down 6% by Wednesday afternoon. That decline may have been exacerbated when a video purportedly showing a Tesla on fire began circulating on the Internet.)
In the introduction of a seven-page report released today, Ben Kallo and Tyler Frank of Baird Equity Research write:
"We are downgrading shares of TSLA from an Outperform to a Neutral rating based on valuation. Since our initiation, TSLA has significantly outperformed the market through solid execution, technology validation, and brand creation. Although we continue to be bullish on TSLA's long-term prospects, we think the stock appreciation reflects its technological leadership and several milestones that could contain execution risk. We would look to become more constructive on execution related pullbacks or significant advances in battery technology."
The Baird analysts point out that while the company has "near flawless execution", its future prospects – including the Model X and improved batter technology – are already priced into the stock. Kallo and Frank maintain their $187 price target.
(Watch: Tesla: Too far, too fast?)
Tesla is one of the highest flying stocks in the market today. Over the past twelve months, it's up about 535%; it's more than quadrupled over the last six months alone.
The company has had some recent marketing successes, becoming the top-selling sedan in Norway and the third-highest-selling luxury car in California. Tesla's $70,000 price tag becomes more affordable in many cases due to government subsidies and incentives.
With a market cap of $23 billion, Tesla is valued at almost half that of General Motors. Tesla is expected to sell about 20,000 cars this year. GM delivered 187,195 cars last month.
So, is this the end of Tesla's stock's incredible run?
JC O'Hara, Chief Market Technician at FBN Securities, takes a look at Tesla's charts on CNBC's "Street Signs" Talking Numbers segment. Looking at the fundamentals is John Stephenson, portfolio manager at First Asset Investment Management.
Is Tesla's stock about to stall? Watch the video to see what the fundamentals and technicals have to say about it.