Jefferies Says TSLA Stock Is a Risky Buy Thanks to Elon Musk

  • Tesla (NASDAQ:TSLA) has received another analyst price target cut
  • Jefferies cites recent “negative news” as a driving factor behind the cut
  • This announcement follows price target reductions from several other prominent firms
The Tesla (TSLA Stock) logo on the side of a building.
Source: Michael Vi / Shutterstock.com

The list of analysts reducing their Tesla price targets continues to grow. Most recently, Jefferies analyst Philippe Houchois reduced his TSLA stock price target from $1,250 to $1,050. This follows price target reductions from both Piper Sandler and Wedbush as well as a highly bearish take from Bernstein.

TSLA stock is up today, but it has already displayed turbulence. Shares rose within the first hour of trading, then quickly lost momentum. As of this writing, TSLA stock is up 7% so far for the day. After plunging hard yesterday to $623 per share, the company still has considerable ground to regain.

Today’s market landscape doesn’t look great for Tesla, with Wall Street’s waning confidence in the company becoming a troubling trend. Let’s take a look at the most recent price target cut.

TSLA Stock: Bearish Energy Rising

For Houchois, the onslaught of negative Tesla news lately is cause for a lower price target. In a note to investors, the analyst outlined the logic behind his bearish take on TSLA stock:

“Long-held fears of disruption from inside have come true, raising Tesla’s risk profile while operating performance continues to set transformative new standards of returns and resource efficiency […] It is hard to isolate factors behind the recent correction […] but we are clearly witnessing an uncomfortable pile up of negative news from ratings to polarizing political opinions and ethical questions.”

The final sentence of this note is particularly important. That’s because most of Tesla’s “negative news” can be traced back to Elon Musk. TSLA stock’s declines first carried into this month when Musk launched his campaign to acquire Twitter (NYSE:TWTR). Now, the company is facing an uphill battle — and Wall Street is taking notice.

The fact Houchois maintains a “buy” rating and points to Tesla’s resource efficiency standards means the analyst does see the stock bouncing back. However, investors shouldn’t ignore the fact that he also slashed his fiscal year volume estimate for Tesla to 1.415 million electric vehicles (EVs). That reduction of 85,000 units was driven both by the loss of production time in China and the “slow start” at Gigafactory Texas. While production is increasing for China-based automakers, Tesla is still making up for lost time in April.

The Bottom Line on Tesla

One analyst reducing a TSLA stock price target is not generally cause for concern. However, when reductions become a trend, investors shouldn’t ignore them. In his analyst note, Houchois summarized Tesla’s problems very well. Given how much Musk has driven the “negative news,” it’s also unsurprising that both investors and experts are losing confidence.

Tesla needs to demonstrate consistent growth to reassure investors it’s still worth betting on. That won’t happen until it sees a major catalyst, like the potential TSLA stock split.

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/jefferies-says-tsla-stock-is-a-risky-buy-thanks-to-elon-musk/.

©2022 InvestorPlace Media, LLC