Tesla Stock Can Drop 34%? Here Is Why the Analyst Say That

Dow Jones2023-11-09

Tesla stock picked up a new bearish rating, and it had an impact in morning trading.

Tesla shares dropped more than 3% in morning trading.

Thursday, according to ratings-aggregation services, HSBC launched coverage of Tesla stock (ticker: TSLA) with the equivalent of a Sell rating and $146 price target, down about 34% from recent levels.

Barron’s doesn’t have the report. HSBC didn’t immediately respond to a request for a copy of its report.

The issue appears to be valuation. The analyst believes the electric-vehicle business isn’t worth what Tesla stock trades at today. What’s more, Tesla’s other businesses, including energy storage, self-driving cars, robots, and artificial-intelligence computing, all have regulatory hurdles that mean slower-than-expected growth in the future.

Tesla stock is worth some $700 billion at current prices. At HSBC’s target price of $146 a share, the company’s market capitalization would be worth closer to $470 billion.

Coming into Thursday trading, Tesla stock is down about 8% over the past three months. Investors are worried about slowing demand for EVs. Global battery-EV sales rose roughly 25% year over year in the third quarter, but that is a slower rate than earlier in the year. Also, there are simply more EVs for sale now, all vying for market share.

Overall, about 43% of analysts covering Tesla rate shares at Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

A new Sell rating doesn’t change the Buy-rating ratio, of course, but it changes the Sell-rating ratio. About 15% of analysts covering Tesla rate shares at Sell. The average Sell-rating ratio for S&P 500 stock is close to 5%. Analysts typically shy away from Sell ratings, and prefer assigning Hold ratings to stocks they don’t favor.

The average analyst price target for Tesla stock is about $239. Among the Buy-rated analysts, the average target price is roughly $290. Among Sell-rated analysts, the average target price is about $120.

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Comments

  • ninjainvest
    2023-11-10
    ninjainvest
    Even if TSLA drop, you can buy more cos it can recover.  
  • Brother272005
    2023-11-10
    Brother272005
    Maybe hsbc bank clients want to buy Tesla shares. Do not trust what they say, they are also investor. Buy low Sell high. 
  • Targarean
    2023-11-10
    Targarean
    Hear hear 
  • CaseyLKC
    2023-11-10
    CaseyLKC
    I think we should look at long term investment instead of short term
  • HLPA
    2023-11-10
    HLPA
    Do not worry on these nitty grittynprice movements every day if you are a long term trafer. Have conviction on the price you beloeve a stoxk will be after doing own due diligence. Analysts more often than not have an ulterior motive in writing these reports so do your research before you trade. Do not panic simply due to a report by one analyst. Believe in your buys after your DD. Hold and yourwill overcome these naysayers.
  • Mr Bull
    2023-11-10
    Mr Bull
    such analyst simply create panic in retail investers and accumulate the stocks in parallel 
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