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Tesla Shares Fall After Wedbush Analyst Cuts Price Target

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Shares of Tesla Inc. (TSLA) are losing more than 5 percent in Monday's trading after Wedbush Securities analyst Daniel Ives slashed his price target on the luxury electric car maker's stock, citing "major concerns" around the trajectory of Tesla's growth prospects.

In a note to investors on Sunday, Ives also said he has concerns over underlying demand for Model 3 cars in the U.S. over the coming quarters. He added that Tesla faces a "Kilimanjaro-like uphill climb" to hit its profitability targets in the second half of 2019.

"With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure," Ives wrote.

Ives kept his rating on Tesla stock at neutral, but cut his price target on the shares to $230 from $275. Just last month, the analyst cut his price target to $275 from $365, and downgraded Tesla to neutral from buy.

Ives said it would be a "Herculean task" for Tesla to hit its full-year production target and added that he sees Tesla producing 340,000 to 355,000 vehicles as a more likely scenario.

While reporting its first-quarter financial results in April, Tesla said it expects to deliver 90,000 to 100,000 cars in the second quarter, and 360,000 to 400,000 vehicles for the full year.

In an e-mail to Tesla's employees last Thursday, Chief Executive Elon Musk said every expenditure at the company, even if small, must be examined and made sure that it is critical. He advised employees to take extreme measures to control costs.

Musk noted that while Tesla raised $2.4 billion in new funds this month, it would be enough for only approximately ten months if the company kept spending as it did in the first quarter of 2019.

Tesla's shares are down $10.86 or 5.15 percent to $200.17 in Monday's trading.

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