JPMorgan Cuts Tesla’s Profit Estimates Due to ‘Unprecedented Damage’

Key Takeaways

• JPMorgan lowered its profit estimates for Tesla after the electric vehicle maker's disappointing delivery numbers.
• The analysts said Tesla has faced "unprecedented brand damage."
• JPMorgan has stated that Tesla sales are worse than expected.

Telsa shares (TSLA) fell 6% on Friday after JPMorgan lowered its earnings estimates for the electric car (EV) manufacturer, citing lower-than-expected delivery.

In a client note, the analysts stated that they reached their conclusion after first-quarter sales were “far lower than our lowest estimate, confirming unprecedented brand damage.” The analysts added that, after seeing Tesla’s Q1 production and deliveries report, “we might have underestimated the level of consumer reaction.” 

Sales Trend 'Worse Than We and the Market Had Appreciated'

JPMorgan noted Elon Musk’s role in the Trump Administration has “contributed the controversy around the Tesla brand.” Analysts explained that although reports suggested Musk could be stepping down in the near future, “what seems clear is that the trend of Tesla sales is worse that we and the market have appreciated.”

They now expect first-quarter fiscal 2020 earnings per share to be $0.36, down $0.40 from their previous estimate, and a full-year EPS at $2.30 as opposed to the previous expectation of $2.35.  

The analysts reiterated their "underweight" rating, saying that they "continue to see large downside" in their $120 December 2025 price target.

Tesla shares have lost almost 40% of their value in the past year.