Topline
Shares of Tesla sank again Thursday, this time following a downgrade from Deutsche Bank analysts panning Teslaās apparent āthesis-changingā shift away from its core electric vehicle business, extending the stockās brutal 2024 selloff.
Key Facts
Tesla stock fell 3% by mid-day, hitting as low as $148.70, its lowest ticker since Jan. 25, 2023.
Thursdayās 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 āhigh likelihoodā of delay for Teslaās 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 Teslaās shifting focus away from its consumer car business will ācreate significantā earnings pressure in coming years.
Rosner cautioned Teslaās 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 ālikely elongated timelineā for earnings growth presented by robotaxis.
Shares of Tesla are now down 40% year-to-date, far underperforming the S&P 500ās and tech-heavy Nasdaqās 6% and 7% respective gains.
Crucial Quote
āThe fact that Mr. Musk announced an unveiling of Robotaxi for Aug 8 in no way means the technology is ready,ā declared Rosner, alluding to Muskās social media post earlier this month indicating there will be an announcement on that date and subsequent post his company will be going āballs to the wallā in building out its controversial self-driving technology. āThere is considerable execution riskā for robotaxis, and when the network actually hits the road ācould be years away,ā Rosner added.
Key Background
Tesla stockās dim stretch coincides with a tough start to the year for other electric vehicle stocksāshares of smaller American competitor Rivian are almost 60% and shares of Chinese rival NIO are down over 50%āas 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. āTesla has now moved into cash preservation mode,ā 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