Investing.com — JPMorgan issued a warning for Tesla (NASDAQ in a note on Thursday, revising its price target, which still forecasts a possible significant decline for the stock.
The bank maintained an underweight rating on the stock, raising the price target to $130 from $115. Tesla shares closed Wednesday's session at $249.02.
“TSLA shares fell -3.5% on Wednesday from stable, apparently following the release of sales and production figures indicating that third-quarter global deliveries were modestly below our estimates and in line with the Bloomberg consensus but, based on our conversations, they may have represented more of a failure against investor expectations,” JPMorgan said.
The bank warned that the company could face its first drop in unit volume in a full year, which could jeopardize its hypergrowth valuation.
Tesla's 3Q24 deliveries of 464,000 units were slightly below JPMorgan's estimate, aligning with the Bloomberg consensus.
However, analysts believe this may have underperformed investors' broader expectations.
“The continued softer trend now appears to position Tesla to potentially not grow unit volumes for the full year for the first time in its history,” JPMorgan stated, adding that this could lead more investors to reassess Tesla's growth status. the company's shares.
They claim that Tesla stock has been very resilient despite a steady decline in performance metrics over the past two years.
“While TSLA stock has remained stable or slightly higher over the past two years, expectations have collapsed for every performance metric,” JPMorgan added, referencing declines in unit volumes, revenue, margin gross and free cash flow.
Additionally, analysts highlighted that Tesla's earnings before interest and taxes (EBIT) for 2024 are now projected to be $7.3 billion, a staggering 74% drop from the $28 billion expected two years ago for the same period.
It is said to underline the stark gap between the company's fundamentals and its share price.
Given this growing disconnect, JPMorgan expressed skepticism that Tesla's potential decline in full-year deliveries will be an “ah-ha” moment for investors.
Instead, they believe it may put further pressure on stocks.
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