With Tesla stock slipping after the massive run that began the year, TSLA shares received a downgrade Wednesday. The EV giant also faces an investigation into possible steering wheel problems.
The National Highway Traffic Safety Administration (NHTSA) on Wednesday announced an investigation into Tesla Model Y vehicles after reports steering wheels can come off while the car is underway.
The NHTSA is looking into around 120,000 Tesla vehicles from the 2023 model year. The auto safety regulator received two complaints that steering wheels detached from the steering column while driving. The NHTSA reports the vehicles were delivered to their owners missing a retaining bolt that attaches the steering wheel to the column.
Tesla stock dropped 3% to 182.00 Wednesday during market trade. Shares retreated 3.1% to 187.71 Tuesday and are down around 11.5% in March. Before TSLA's retreat, shares had shot up, doubling from Jan. 6 bear market lows of 101.81.
Also on Wednesday, investment bank Berenberg downgraded Tesla to a "Hold" rating, from its previous "Buy" designation. At the same time, analyst Adrian Yanoshik increased his TSLA price target to 210, up from 200. That's about 12% above Wednesday's closing price.
The Berenberg analyst wrote Tesla's vehicle price cuts will hit gross margins in the short run, but still sees high margins long term.
Yanoshik added "misplaced fears of a price war" appear to have been accepted by the market and that volume opportunities will increase when Tesla releases its cheaper next generation vehicle. The analyst also says Tesla's valuation "now leaves less room for disappointment."
The Tesla stock downgrade from Berenberg comes after Jefferies on Monday raised the firm's price target on Tesla stock to 230, up from 180. Jefferies maintained a "Buy" rating on TSLA shares with analyst Philippe Houchois writing that a lack of new product announcements during Tesla's investor day does not imply major growth delays.
Futures Fall: Market Rally At Key Levels; Tesla Extends Slide
Tesla Stock
On Tuesday, TSLA shares lost more than 3%. Tesla stock is now just below the 21-day moving average. TSLA is down 8% on the week has slipped 11.5% on the month.
Tesla stock has paused below the 200-day moving average after a huge run to start the year. Aggressive investors could use 217.75 as a buy point. However, to be safe, Tesla stock should clear the 200-day line, which is now around 220, according to MarketSmith analysis.
The global EV giant ranks fifth in IBD's Auto Manufacturers industry group. The group itself ranks No. 65 out of the 197 industry groups tracked by IBD.
Tesla has a 73 Composite Rating out of 99. The stock also has a 19 Relative Strength Rating. The EPS Rating is 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
