Tesla (TSLA) Faces Potential Downside as JPMorgan Lowers Price Target to $130
In a recent note, JPMorgan issued a warning for Tesla (TSLA) by revising its price target to $130, signaling a potential significant downside for the stock. The bank maintained an Underweight rating on the stock, with Tesla shares closing Wednesday's session at $249.02.
The decline in TSLA shares on Wednesday was attributed to sales and production figures for the third quarter falling short of expectations. JPMorgan noted that Tesla's 3Q24 deliveries of 464,000 units were slightly below their estimate, aligning with Bloomberg consensus but potentially missing broader investor expectations.
Analysts at JPMorgan expressed concerns about the company facing its first-ever full-year decline in unit volumes, which could impact its hypergrowth valuation. They highlighted a steady decline in performance metrics over the past two years, including unit volumes, revenue, gross margin, and free cash flow.
Furthermore, JPMorgan projected a significant drop in Tesla's earnings before interest and taxes (EBIT) for 2024, indicating a growing disconnect between the company's fundamentals and its stock price. The bank expressed skepticism that a potential full-year delivery decline will trigger a positive reaction from investors, potentially putting further pressure on the stock.
In conclusion, investors should be cautious about Tesla's stock performance in light of these warnings from JPMorgan. It is essential to monitor the company's future delivery numbers and financial metrics to make informed investment decisions.