Tesla stock was downgraded to a sell rating Friday, a day after TSLA shares sold off on a report that the EV giant is pushing out its "robotaxi" reveal event from Aug. 8 to October. TSLA shares advanced after the market opened Friday.
UBS analyst Joseph Spak downgraded Tesla stock to sell from neutral, but increased the price target to 197 from 147. Spak noted that the stock's valuation premium has recently widened on artificial intelligence (AI) enthusiasm in the market. The analyst added that the company's automotive growth opportunities are limited.
Spak values Tesla's AI efforts, Full Self-Driving (FSD), the Optimus humanoid robot and other future growth opportunities at more than a $500 billion "stub." The analyst wrote that giving that "stub" a five-year time horizon, that implies a value of $1 trillion.
"One would need to see an even larger opportunity to justify a buy rating," Spak wrote.
"While TSLA is investing heavily in AI and the tech is making progress, investment is costly, pace of improvement may slow and the payoff is long dated," he added.
On Tesla's auto business, UBS doesn't see the see the company hitting 5 million vehicle deliveries by 2030, predicting the number will be 3.9 million units.
UBS values Tesla auto segment at $57 per share. The firm's per share value of Tesla's energy business is at $18 with FSD and the robotaxi combining for around $18 per share as well.
For perspective, Adam Jonas, Morgan Stanley's high-profile auto analyst, on Wednesday kept his Tesla stock price target of 310 unchanged but increased Tesla Energy to $50 per share, up from his previous $36 per share view. That comes out to a $183 billion business. Jonas also cut his valuation of Tesla's auto segment by $15, bringing it to $56 per share.
Tesla stock gained 3% to 248.23 during market action on Friday. On Thursday, TSLA shares declined 8.4% to 241.03 after booking an 11th consecutive advance on Wednesday. Many top performing stocks struggled Thursday, including Nvidia.
Tesla Stock Performance
TSLA stock surged 44% in its 11-day win streak, the longest run since a string of 13-consecutive gains in June 2023.
Last week, Tesla stock skyrocketed 27.1% to 251.52, moving above the stock's 200-day moving average as Q2 deliveries fell vs. a year earlier but beat lowered expectations.
Shares are now greatly extended from the 191.08 from handle buy point, according to MarketSurge chart analysis. That buy range extended to 200.63.
TSLA stock is around a long-term trendline going back to its late 2021 all-time high. Tesla has been long overdue for at least a pause from its advance.
In June, shares gained more than 11%. Tesla shareholders recently voted in favor of giving Musk his 2018 $56 billion pay package and reincorporating the EV giant in Texas, moving it from Delaware.
With the annual meeting wrapped up, analysts are looking to Tesla's second-quarter earnings on July 23.
Tesla stock ranks third in the 35-member IBD Auto Manufacturers industry group. The stock has an 82 Composite Rating out of a best-possible 99. Shares have a 75 Relative Strength Rating and a 62 EPS Rating.
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