Investors are glued to Tesla (TSLA) at writing following reports that its billionaire chief executive, Elon Musk, will personally oversee European sales after firing Omead Afshar – the company’s vice president of manufacturing and operations – last week.
Musk is seizing operational control at a time when the EV maker is scrambling to stabilize sales in Europe. According to the latest data, TSLA registrations were down 61.5% in Denmark and 64.4% in Sweden last month.
Note that Tesla stock is currently down some 18% versus its May high.
Continued declines in European sales is a major red flag for Tesla investors given the region is the company’s second-largest market and a key pillar of the global EV demand.
TSLA shares slipped on Tuesday because registrations down 60%-plus in both Denmark and Sweden signals intensifying competition, particularly from its Chinese rivals.
The aforementioned weakness is significant given EV adoption at large is growing at an exciting pace across the continent – suggesting Tesla is losing share.
In short, the regional slump undercuts revenue forecasts, pressures margins, and raises questions about brand perception, potentially making it more difficult for Tesla stock to extend gains moving forward.
Tesla is scheduled to report its delivery numbers for the second quarter on Wednesday, July 2.
According to JPMorgan analyst Ryan Brinkman, the EV maker’s Q2 deliveries could come in as much as 19% below its year-ago figure, potentially triggering another leg down in Tesla shares in the near term.
In a research note this morning, Brinkman also said there’s a “material risk to the outlook for full year deliveries” as he reiterated his $115 price target on the EV stock, flagging a more than 60% downside risk from current levels.
While not nearly as bearish as JPM, other Wall Street firms recommend against buying Tesla stock at current levels as well.
According to Barchart, the consensus rating on TSLA shares currently sits at “Hold” only with the mean target of about $297 below its current trading price.