Tesla shares slide after downgrade
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The news: Shares of electric vehicle maker Tesla have tumbled after brokerage Wells Fargo slashed its price target and downgraded the stock over concerns about its near-term outlook.
The numbers: The brokerage cut Tesla's price target to USD120 from USD200, implying a more than 30% downside to current levels and downgraded the stock to ‘underweight’.
Shares in the company slid nearly 4.5% on the news to close at USD169.48 and have now lost more than 30% of their value so far in 2024.
The context: Wells Fargo analyst Colin Langan raised concerns about the outlook for the automaker’s sales volumes, saying its repeated price cuts have had a diminishing effect.
The company slashed prices throughout last year, cutting the price of its popular Model Y vehicle by as much as 26.5% in the US, resulting in a shrinking gross margin. Tesla is battling a global slowdown in EV demand and CEO Elon Musk in January warned that growth would be "notably lower" this year. Tesla has nine ratings of ‘sell’ or lower among the 48 brokerages covering the stock, Reuters reported citing LSEG data.
The source: Reuters
