Tesla (TIKER: TSLA.NASDAQ) dropped almost 2% after Jefferies initiated coverage on the electric automaker with an underperform rating and a 280 price target — a 27% discount to Monday's closing price, Street Insider reports.
It was especially disappointing after the Manday trade session when Tesla shares reached an all-time high of $389,57.
However the next day Jefferies told its client to avoid the electric car maker's shares, saying the company's financial performance will be weak in the coming years.
"It is with a bit of a heavy heart that we initiate coverage of Tesla at underperform. Achievements to-date and vision are impressive, but we don't think Tesla's vertically integrated business model can be scaled up as profitably and quickly as consensus thinks and valuation multiples imply,” analyst Philippe Houchois wrote in a note to clients Tuesday.
He predicted the electric car manufacturer will continue to lose money on an annual basis through 2019.
The electric car maker's shares are outperforming the market this year, up 80% year to date through Monday compared with the S&P 500's (TIKER: SPX.INDEX) 12% return.