Topline
Shares of Tesla sank again Thursday, this time following a downgrade from Deutsche Bank analysts panning Tesla’s apparent “thesis-changing” shift away from its core electric vehicle business, extending the stock’s brutal 2024 selloff.
Tesla has had a brutal month, highlighted by its major layoff announcement and disappointing vehicle ... [+]
Key Facts
Tesla stock fell 3.5% to below $150, its lowest closing ticker since Jan. 2023.
Thursday’s decline came after the Deutsche Bank group led by Emmanuel Rosner cut its recommendation for the stock from a buy to a hold, slashing its price target for Tesla by 35% to $123, pricing in 19% of further downside.
Rosner cited the “high likelihood” of delay for Tesla’s less expensive Model 2 car and pivot into its development of robotaxis, its early-stage ride hailing network of autonomous vehicles, as the primary reason for his newfound skepticism, explaining Tesla’s shifting focus away from its consumer car business will “create significant” earnings pressure in coming years.
Rosner cautioned Tesla’s share price could face further downward pressure as fundamental-hungry investors may jump ship with dwindling financial results as investors willing to wait out the “likely elongated timeline” for earnings growth presented by robotaxis.
Shares of Tesla are now down 40% year-to-date, far underperforming the S&P 500’s and tech-heavy Nasdaq’s 6% and 7% respective gains.
Crucial Quote
“The fact that Mr. Musk announced an unveiling of Robotaxi for Aug 8 in no way means the technology is ready,” declared Rosner, alluding to Musk’s social media post earlier this month indicating there will be an announcement on that date and subsequent post his company will be going “balls to the wall” in building out its controversial self-driving technology. “There is considerable execution risk” for robotaxis, and when the network actually hits the road “could be years away,” Rosner added.
Key Background
Tesla stock’s dim stretch coincides with a tough start to the year for other electric vehicle stocks—shares of smaller American competitor Rivian are almost 60% and shares of Chinese rival NIO are down over 50%—as the industry grapples with demand challenges globally. Tesla, which is the largest automaker in the world by market capitalization, has suffered from the twin blows of declining car delivery growth and shrinking profit margins. “Tesla has now moved into cash preservation mode,” judged Rosner, a dire proclamation for a company long heralded for its explosive growth perhaps reflected by its Monday announcement it will slash its headcount by more than 10%.
Further Reading
