Elon Musk both asset, 'considerable risk' to Tesla, per HSBC: 4 big analyst cuts
Investing.com | Author Davit Kirakosyan
Published Nov 09, 2023 06:48AM ET
Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: a Sell initiation at Tesla, and downgrades at Ginkgo Bioworks, Navient, and Masonite International.
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HSBC starts Tesla at Reduce, sees 35% downside risk/h2
Tesla (NASDAQ:TSLA) shares were falling 3.5% Thursday after HSBC initiated coverage on the EV maker with a Reduce rating and a $146 price target, which implies nearly 35% downside risk from Wednesday’s closing price.
The analysts assume that Tesla’s businesses, including Full Self-Driving (FSD), Dojo, and Optimus, will be successful by 2030 - but also indicated that the associated capital costs should be significantly higher than the group average due to regulatory and technological hurdles.
The analysts see Tesla’s CEO, Elon Musk, as both an asset and a risk, writing:
“Elon Musk’s global fame has afforded the group a customer awareness that far outweighs the money it has spent on marketing and advertising, which is therefore a tangible benefit to the P&L. Leaving aside the current legal issues Elon Musk faces, we think his prominence presents a considerable “singleman” risk at the group."
From a business fundamentals viewpoint, the analysts consider the timing of Tesla's vehicle deliveries to be a primary point of concern. Tesla has set an ambitious target to produce 20 million electric vehicles by the end of 2030, and the analysts say they "see considerable potential in Tesla’s prospects and ideas," but also "think the timeline is likely to be longer than the market and valuation is reflecting."
Shares were recently changing hands at $214.22.
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