Tesla Motors Inc. (NASDAQ: TSLA) is getting to see another dose of reality setting in on its stock price on Wednesday. Bank of America Merrill Lynch has issued a research report on Tesla, and it doesn’t sound positive right from the start. The report is called “A Bad Moon Rising?” That doesn’t exactly sound too positive, does it?

Merrill Lynch’s John Lovallo and John Murphy are negative right out of the gate, even after the bad title. They already have written in their reports about how Tesla’s shares are vastly overvalued from a fundamental standpoint, and they even made note of 300,000 reasons to have doubt and caution.

This report believes that the oversize load is implied in the current share price. They also bring up that retail investors could ultimately be at risk as institutional ownership of Tesla continues to wane. Another warning is about what can go wrong when sentiment behind a momentum stock shifts.

What the two Johns at Merrill Lynch are getting at is that the shift in sentiment is slowly taking place. The image issue after the Model S battery fire and potential NHTSA probe were brought up. Speculation of a slowdown in Tesla’s European expansion also is cited as a caution.

The conclusion is that emerging cracks are forming in Tesla’s stock. For earnings and numbers, Tesla’s outlook is for slightly over 5,000 units, Bank of America’s estimate calls for about 5,500 units, and some analysts expect 7,000 units or more.

A quote was shown as:

Despite our view that Tesla is an important innovator in the electric vehicle market, with solid technology and a reputable brand, we continue to believe meaningful execution challenges remain and the shares are overvalued. Furthermore, we believe Model S demand could cool off once early adopters receive vehicles and expect the ultimate addressable market for luxury, electric vehicles to be smaller than many expect.

The rating from the Merrill Lynch team is very unfavorable. The two Johns are maintaining their Underperform rating. The price target is listed all the way down at $45, based on 2015 expected enterprise value, versus EBITSA of about 12 times.

24/7 Wall St. wants to represent both sides of the coin here because Tesla is such a volatile stock. The Merrill Lynch team did downgrade Tesla to Underperform from Neutral back on February 21, 2013. Shares closed at $38.54 the prior day, so the team missed a major move to the upside in Tesla.

The share price disclosure was $171.54 on the research report, but shares are actually down about 3% at $166 on more than 4.3 million shares as of 11:10 a.m. EST. The average daily volume is about 10.4 million shares, and the 52-week trading range is $27.02 to $194.50.

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