Tesla stock drops after Goldman Sachs downgrade
Tesla's (TSLA) stock experienced a decline on Monday following yet another downgrade by a top financial institution on Wall Street. This consistent pattern of downgrades is gaining increasing significance for investors and cannot be overlooked.
On Sunday night, Mark Delaney, an analyst from Goldman Sachs, lowered his rating on Tesla shares from Buy to Neutral. This is now the third time that analysts from major firms such as Barclays and Morgan Stanley have expressed negative views on Tesla in the past week.
In a surprising turn of events, Delaney has increased his projected price for the stock to $248 from $185. Despite this, he advises investors to reduce their investment in Tesla after it has more than doubled in value this year.
Tesla's shares experienced a significant decline of approximately 4.5% during the afternoon session on Monday.
Delaney's perspective on the downgrade is primarily rooted in a assessment of the value.
Delaney stated that our shift in perspective is primarily motivated by recognizing that the stock is now receiving more recognition for its potential in the long run. However, we are also aware of the challenging pricing conditions for new automobiles, which we anticipate will continue to affect Tesla's automotive non-GAAP gross margin throughout this year.
Delaney and the Goldman crew mention a variety of elements that clarify the recent increase, a surge the company claimed "went beyond what we anticipated" in terms of size.
Goldman Sachs observed positive monthly sales records for April and May, a lesser amount of discounting than what investors were anticipating. Additionally, all iterations of the Model 3 received the complete electric vehicle tax credit. The utilization of Tesla's NACS standard for charging agreements and the recent emphasis on businesses profiting from artificial intelligence also contributed to this development.
Attendees admire a Tesla Model 3 electric car (EV) on display at the third China International Consumer Products Expo in Haikou, Hainan province, China on April 12, 2023. The image was captured by Casey Hall, a photographer from REUTERS.
However, the main point being emphasized by Goldman Sachs is that they still consider Tesla as the dominant force in the electric vehicle (EV) industry, and this belief is reflected in the current alignment of the company's stock price with that perspective.
In general, we are confident in our opinion that Tesla is in a favorable position for long-term expansion, considering its dominant presence in the electric vehicle and sustainable energy industries (which we credit partly to its capability of providing comprehensive solutions like charging, storage, software/FSD, and services through a direct sales approach). Delaney expressed that this belief is now more accurately reflected in the company's stock.
Pras Subramanian works as a journalist at Yahoo Finance. Feel free to track him on Twitter and Instagram.
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