JP Morgan has issued a severe warning on Tesla, slashing its rating to 'Underweight' and forecasting a potential 60% collapse in the stock's value. The investment bank's stark prediction suggests TSLA could plummet to around $145, erasing significant investor capital as the electric vehicle maker faces mounting headwinds. Analyst Ryan Brinkman cautioned that holding the equity now constitutes a high-risk proposition amid the deteriorating outlook.

Why Is JP Morgan Bearish on Tesla Stock? (TSLA)

JP Morgan pointed out the weak Q1 deliveries of the EV manufacturer, which recorded a pile-up of unsold cars. The company has sold 358,000 vehicles, which is 4% lesser than the estimated 385,000 delivery forecast. The unsold inventory will only lead to a loss in the balance sheet that will reflect badly on Tesla stock. “he wrote in a note to clients.

The EV manufacturer also produced 50,000 more cars than it sold during the last quarter. The only option to get them sold is to provide further discounts, but this would again eat into its profits. Therefore, in both ways, the company remains vulnerable as free cash flow remains grim. Its competitor, China’s BYD, is expanding across the EV sector, making it harder for Tesla to hold its ground. All of these are defining factors that are weighing Tesla stock down in the charts.