Tesla Stock Fell 1.5% in Premarket Trading

Tesla shares were trading down 1.5% premarket after a JPMorgan analyst reiterated a sell rating on the stock with a price target of $120.

"Tesla’s softer trend and below-consensus adjusted automotive gross margin comes before the impact of large price reductions that will primarily be felt beginning in the first quarter," said JPMorgan's Ryan Brinkman in a client note.  "As such, we view margin trajectory negatively and expect that consensus margin expectations are likely to decline."

"Although both technology and execution risk seem substantially less than was once feared, expansion into higher volume segments with lower price points seems fraught with greater risk relative to demand, execution, and competition," Brinkman continued. "Meanwhile, valuation appears to be pricing in upside related to expansion into mass-market segments well beyond our volume forecasts for the Model 3."