After unfinished deliveries highlighted growth concerns, JPMorgan lowered its target on Tesla’s stock price, with the stock price now expected to fall 32%

Tesla CEO Musk.Antonio Masillo/Getty Images

  • JPMorgan Chase said Tesla shares are facing a heavy hit after deliveries fell sharply in the first quarter.

  • The bank lowered its price target on Tesla to $115 from $130, representing a potential downside of 31%.

  • “Even with a 59% decline, valuations remain high,” JPMorgan said.

Tesla Shares are reportedly in trouble after the electric car maker reported record delivery misses on Tuesday JPMorgan.

Tesla Reported car deliveries in the first quarter were 386,810 units. Well below Wall Street estimates of about 450,000.

JPMorgan Chase reiterated its “underweight” rating on Tesla and lowered its target price from $130 to $115, which could fall 31% from current levels.

Tesla issued a bearish call after its stock price plummeted 60% from its 2021 all-time high. JPMorgan analyst Ryan Brinkman said the decline may not be enough.

“Even with a 59% decline, valuations remain high,” Brinkman said in a note on Wednesday.

Brinkmann accuses Demand weakens Tesla’s sales woes have led to increased competition and signals that investor patience may be wearing thin after three years of sluggishness.

“We have significantly lowered our expectations and price target for Tesla stock after updating Q1 2024 deliveries. Yesterday’s deliveries were significantly below JPMorgan and consensus estimates, which we estimate may give investors That spells trouble for investor confidence in the company’s long-term growth prospects, which are critical. “Maintaining the stock’s rare valuation multiple,” Brinkman said.

Brinkman said Tesla’s first-quarter deliveries missed analysts’ expectations, its largest margin ever, underscoring how far apart the company’s performance is, especially considering analysts’ expectations were lower than expected. It was already declining before the data was released.

“At the peak of expectations on June 10, 2022, analysts polled by Bloomberg expected Tesla to sell 626,000 vehicles in the first quarter of 2024, but the actual number of vehicles sold in the first quarter of 2024 reported yesterday was only 387,000 units, -38% less than the previous forecast,” Brinkmann explained.

The gap between peak expectations and actual sales in the first quarter was blamed for being too large With the rise of hybrid vehicles, Factory supply disruptions, and Fierce price competition from Chinese automakers.

These risk factors may not end soon, making it more difficult for Tesla to maintain its current premium valuation.

“We caution that if Tesla does not succeed in quickly returning to sales and revenue growth, at least if investors choose not to view the stock as a still high-growth company, the valuation multiples will be lower,” Brinkman said. The company’s share price may fall further.”

Brinkman’s biggest concern is that even as Tesla’s car sales slow, its underlying profits have been deteriorating as several car price cuts over the past year have eroded the company’s profit margins.

The deterioration in profits could put additional pressure on Tesla and its investors, who may ultimately abandon the company’s ambitious goals for fully autonomous cars and humanoid robots and instead focus on profitability in its core automotive business.

“Given that deliveries are now known to have contracted in the first quarter of 2024, we are very confident that both vehicle and total company revenue will be negative in the first quarter, which could lead to negative returns for even the most optimistic investors,” Brinkmann said. Do mood checks, too.”

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