March 29, 2018 / 8:35 PM / 24 days ago

Wall Street taps the brakes on Tesla selloff

SAN FRANCISCO, March 29 (Reuters) - Tesla Inc’s stock rebounded on Thursday but still suffered its worst week since July after one of the most optimistic analysts covering the electric car maker chopped his price target ahead of quarterly production data expected next week.

Shares of the company headed by Silicon Valley billionaire Elon Musk climbed 3.24 percent to $266.13, trimming its loss for the week to 12 percent. That made it Tesla’s worst week in nine months.

Nomura Securities analyst Romit Shah cut his price target for Tesla’s stock to $420 from $500, which had been highest among 27 analysts tracked by Thomson Reuters.

In a research note, Shah said he reduced his target price due to a recent selloff in major technology stocks including Amazon.com Inc, Facebook Inc and Apple Inc , which he said are comparable to Tesla.

Shah also pointed to reduced estimates for Tesla’s Model 3 production and expectations that the money-losing company will have to raise $3 billion in capital to finance its operations.

Tesla investors this week have been shaken by Moody’s downgrade of the car maker’s credit rating, which may make it harder to finance its business.

Also hurting Tesla’s stock, the U.S. National Transportation Safety Board on Tuesday said it had opened a field investigation into a fatal Tesla Model X crash and vehicle fire in California on March 23.

Those developments, and concerns about Tesla’s troubles ramping up output of the Model 3, may be scaring away investors who had been riding upward momentum in Tesla’s stock, Barclays analyst Brian Johnson, who has an “underweight” rating on the shares, wrote in a note on Friday.

Tesla’s long-term viability depends on selling billions of dollars of Model 3s, its new sedan that starts at $35,000. But production bottlenecks have forced Tesla to repeatedly push back its targets.

The company has temporarily stopped its other production line to divert workers to boost Model 3 output in a bid to reach its goal of 2,500 cars a week by the end of the quarter, Bloomberg reported on Thursday here. A Tesla spokesperson said it was normal to reassign some assembly workers when one line shuts down, but denied this case was due to an end-of-quarter push.

Production delays blamed on battery issues resulted in only 2,425 cars being produced in the entire fourth quarter.

Reporting by Noel Randewich; Additional reporting by Alexandria Sage; Editing by Will Dunham

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