After a tough month, TeslaTSLA The stock fell further on Nov. 9 when HSBC initiated coverage of the EV leader with a downgraded rating and a $146 price target, a roughly 30% drop from the stock’s current levels.
HSBC analyst Michael Tyndall cited numerous factors that he believed would continue to hamper Tesla’s growth.
Chief among them is his understanding that spending tied to the growth of Tesla’s non-automotive businesses (autonomous driving, artificial intelligence, the Optimus robot and its Dojo supercomputer) will likely be “well above the group average, given the regulatory and technological challenges”. “they face each other.”
Related: Tesla bulls say demand for electric vehicles is increasing. This is what is really happening
Tyndall’s biggest concern, however, revolves around the billionaire who runs the company: Elon Musk.
“Elon Musk’s global fame has given the group a customer awareness that far exceeds the money it has spent on marketing and advertising, which is therefore a tangible benefit to (profit and loss),” Tyndall said.
“Putting aside the current legal issues facing Elon Musk, we believe his prominence presents considerable risk to the group.”
The stock closed the day down nearly 5.5%, hitting a price of $209.98, well below the levels it was trading at before reporting third-quarter earnings.
Shares rebounded 2.2% the next day, to $214.65, as Tesla bulls came to the stock’s defense, unfazed by both HSBC’s 108-page report and its effect on the stock price. of Tesla.
The stock had fallen 32% between its 2023 closing high of $291.26 on July 19 and an Oct. 30 close of $197.36. The November 10 close was 8.8% higher than October 30.
The bulls’ strong belief is that Tesla is more than just a car company, a belief that Tyndall does not appear to share.
Related: One of Elon Musk’s boldest Tesla promises goes in the opposite direction
Tesla bulls respond to HSBC
Gary Black, managing partner of Future Fund and prominent Tesla bull, wrote on November 10 that HSBC’s report is based on a mean reversion analysis, something that seems more in line with the valuation of a “slow-growing legacy auto company than a high-growth tech stock like Tesla.”
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The biggest mistake the report makes, Black said, is assuming Tesla volume will grow to only 5.9 million vehicles in 2030 from 1.8 million vehicles in 2023. Black says Tesla volume in 2030 will surpass 10 million, assuming a 60% global adoption of electric vehicles and a 20% market share for Tesla.
“Reading the 108-page report, which has many useful graphs, it is almost as if the research team had a predetermined answer they wanted to arrive at (a Reduce rating) and constructed their analysis to fit the desired conclusion,” Black said.
His Tesla price target is $300.
Related: Former Ford CEO Warns of Fierce Challenge Ahead for Electric Vehicles
Tesla bullish thesis intact: Wedbush’s Dan Ives
Wedbush Securities analyst Dan Ives, a prominent Tesla bull with a $310 price target, said on Nov. 9 that he viewed the current sell-off as little more than an opportunity to increase his stake in the company.
The bears, he said, see Tesla as an auto company. But Ives sees it “as a disruptive technology company, which is why I see the sell-off here and much of the hate as just another opportunity to own it.”
Ives is convinced that, far from falling to the $146 range that HSBC predicts, Tesla shares will soar over the next six to nine months, to trade above $300 per share, a level the stock has not reached. from 2022.
“I think this is more of an air pocket that we’re seeing from a growth perspective,” Ives said. CNBC. “Looking ahead to next year, I think the number is conservative and the sum of the parts… when you look at battery technology (fully autonomous driving), to me this is more of an opportunity for success than a time to hide in a cave.”
Part of this optimistic outlook comes from Ives’ belief that 95% of the price cuts have been made, a factor that, if confirmed, could begin to push Tesla’s gross margins back into the region of a giant. of big technologies.
Ives also says the company’s cost-cutting efforts in China were a strategic move to regain market share, something that will eventually overcome weakening Chinese demand.
The analyst maintained that Tesla remains far ahead of the competition in the electric vehicle sector, where most of its competitors have yet to discover scale. Until they do, they don’t really pose a threat.
“It’s still Tesla’s world and everyone pays rent,” Ives said.
Related: Here’s why Tesla bears are so wrong, according to Wedbush analyst Dan Ives
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