Tesla stock received a new bearish rating from HSBC, which had an immediate impact on early trading. With the equivalent of a Sell rating and a price target of $146, down approximately 34% from recent levels, HSBC’s coverage highlights concerns about Tesla’s valuation.
The analyst believes that the electric-vehicle business is currently overvalued. Additionally, Tesla’s other ventures including energy storage, self-driving cars, robots, and artificial-intelligence computing face regulatory hurdles that may impede growth in the future.
At present, Tesla stock holds a value of around $700 billion. However, if HSBC’s target price of $146 per share were to be realized, the company’s market capitalization would decrease to approximately $470 billion.
Unsurprisingly, the report has impacted Tesla’s stock performance. During premarket trading, shares fell by 1.1% to $219.76 per share. Meanwhile, S&P 500 futures experienced a modest increase of 0.1%, and Nasdaq Composite futures saw a slight decline of 0.1%.
Over the past three months, Tesla stock has already declined by about 8%. One of the primary concerns among investors is the potential for slowing demand in the electric vehicle market. Although global battery-EV sales saw a year-over-year increase of roughly 25% in the third quarter, this growth rate is slower compared to earlier in the year. Additionally, the increase in EV availability leads to heightened competition for market share.
In terms of analyst ratings, about 43% of analysts covering Tesla rate its shares as Buy. This percentage is slightly lower than the average Buy-rating ratio of approximately 55% for stocks in the S&P 500.
Although the introduction of a new Sell rating does not directly alter the overall Buy-rating ratio, it does impact the Sell-rating ratio. Currently, approximately 15% of analysts covering Tesla rate its shares as Sell, which is significantly higher than the average Sell-rating ratio of around 5% for S&P 500 stocks. Analysts tend to avoid assigning Sell ratings and often opt for Hold ratings instead when they are not favorable towards a stock.
On average, analysts have set a price target of approximately $239 for Tesla stock. Among the Buy-rated analysts, the average target price is approximately $290, while among the Sell-rated analysts, the average target price is about $120.