Tesla stock fell Thursday, marking a new 52-week low, as the global EV giant received a downgrade based on Chief Executive Elon Musk's decision to prioritize its robotaxi program over its cheaper next-generation vehicle.
Deutsche Bank analyst Emmanuel Rosner downgraded Tesla stock Thursday to a hold rating from a buy. Rosner also lowered the firm's price target to 123, down from 189, on the "high likelihood" of the $25,000 Model 2 getting delayed and the company's change of strategic priority to robotaxi.
Rosner wrote that the previous buy rating was based on Tesla's next-generation vehicle priced at $25,000 coming late in 2025, which could allow the company to reaccelerate volume, margins and free cash flow.
However, it now appears Tesla's future is tied to "cracking the code on full driverless autonomy," which represents a "significant technological, regulatory and operational challenge," according to Rosner.
The analyst added that the shift in focus to the robotaxi is "thesis-changing" and that it could undergo a "potentially painful transition in ownership base" with EV investors "throwing in the towel" and "eventually replaced by AI/tech investors with considerably longer time horizon."
Tesla stock dropped 3.5% to 149.93 during market action Thursday, hitting a fresh 52-week low of 148.70. This comes after Tesla stock on Tuesday angled down 2.7% to 157.11, undercutting its previous 2024 low of 160.51 from March 14.
Meanwhile, Cathie Wood and her Ark Invest funds purchased 20,683 shares of Tesla on Tuesday and 66,504 TSLA shares Wednesday, according to the daily trade disclosures. Wood has been beefing up Ark's Tesla holdings in 2024. Cathie Wood has long been bullish on Tesla's autonomy push and robotaxi.
Tesla Stock Performance
TSLA stock gained 3.7% to 171.05 last week, buoyed by Elon Musk's promise of a robotaxi unveiling on Aug. 8. The prior week, Tesla stock sank 6.2% and Cathie Wood purchased nearly 453,000 shares.
TSLA shares are trading below the 50-day moving average after falling around 13% in March.
Tesla Stock Has Plunged In 2024, But At Least It's Cheaper, Right? Nope
Meanwhile, analysts and investors await news on Musk's strategy on the robotaxi and the next-generation vehicle during the upcoming Q1 earning call next Tuesday.
Analysts project Q1 earnings will fall around 42% to 49 cents per share with sales declining 4.5% to $22.27 billion. If Tesla Q1 EPS comes in as expected, it would be the lowest quarterly level since the EV giant hit 48 cents per share in Q2 2021.
Tesla reported in early April that global first-quarter deliveries totaled 386,810 while it produced 433,371 vehicles. The deliveries included a combined 369,783 Model 3 and Model Y units along with 17,027 "other" vehicles. Tesla's deliveries of 386,810 in Q1 undercut even the lowest estimates and marks the lowest quarterly deliveries since 344,000 in Q2 2022.
The EV giant blamed the first-quarter performance on issues with the production ramp up of the updated Model 3 along with factory shutdowns.
The EV giant ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 32 Composite Rating out of a best-possible 99. Tesla stock also has a 10 Relative Strength Rating and a 67 EPS Rating.
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