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12/07/24
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Tesla Stock Keeps Declining on UBS Cutting Rating to Sell
On Thursday, Tesla shares dropped more than 8% after a Bloomberg report revealed that the electric vehicle behemoth was postponing the unveiling of its Robotaxi to October.
Bloomberg cited sources familiar with the matter and reported that the delay was intended to provide development teams with more time to complete prototypes.
On Friday, Tesla shares extended the losses and slid 1.4% after the open as UBS analysts downgraded the stock to Sell from Neutral.
UBS analysts said Tesla was more than an auto company, and there were positive developments that added further support. As expectations for the core Auto business deteriorated, this was increasingly important.
They added that Tesla had always had a premium attached to it for other growth initiatives in the future, which made valuing that optionality properly difficult. They believed that the premium recently widened on AI enthusiasm.
Analysts estimated a value of more than $500B attributed to future growth after evaluating Tesla’s various businesses. That implies a future value of $1T even with a five-year time horizon, which only justifies current stock levels.
The analysts added that although Tesla was investing in AI heavily and the tech was making progress, the payoff is long dated, the rate of improvement may slow and investment is costly.
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