Tesla shares fell 8% on Thursday after disappointing third-quarter earnings and news about the future of the Cybertruck left investors unimpressed, Business Insider writes.
Comments from Tesla CEO Elon Musk also did not reassure investors, as he said it would be incredibly difficult to increase Cybertruck production: “We dug our own grave with Cybertruck. No one digs a grave better than ourselves.”
Against this background, JPMorgan analysts doubted the further sustainability of the company’s current valuation of almost $800 billion, since even after a sharp price reduction of 15-20% worldwide for all its cars, Tesla is still unable to deliver more cars due to falling demand .
The bank also noted that Tesla’s third-quarter EBIT margin of 7.5% no longer stands out among other automakers, while Ford and General Motors posted similar margins of 8.4% and 7.2 % in the second quarter. Therefore, the bank reiterated its “underweight” rating and target price of $135 for the company’s shares, which means a potential decline of 40%.
Wedbush analysts went further, calling Tesla’s report a “mini-disaster” as Wall Street wanted to see the company beat falling margins and persistent price cuts, but instead heard from Musk, who focused on higher interest rates, investments in AI and highlighted the challenges in producing the Cybertruck over the next 12 to 18 months.
Wedbush reiterated its Overweight rating but lowered its share price target to $310 from $350, representing a 38% upside.
Bank of America also highlighted the ongoing risk of price declines due to shutdowns at Tesla factories and price cuts, a double whammy that weighed on earnings.
The bank affirmed its “market average” rating for Tesla shares, but lowered its target price from $300 to $290.
