Philip Securities analysts downgraded Tesla stock to Sell and said there wasn’t much to like about the EV firm after its latest quarterly report. The analysts set a price target on Tesla at $135, implying close to 40% downside risk from current levels.
The downgrade came amid increasing worries, mainly pressured auto margins, soft pricing and deliveries, and little commentary” from Tesla management to dispel short-term concerns.
Tesla ’s EV deliveries rose by 15% q/q, probably driven by the 6th straight quarter of attractive financing options and reduced EV prices. Deliveries, however, dropped by 5% y/y for the second straight quarter, mirroring persistently weak demand.
Analysts noted that intense competition, especially in China, was still a crucial short-term headwind, and the potential decrease in IRA credits if Trump were to be elected to office may also impact demand in the US negatively. Auto revenue dropped 7% y/y.
EU tariffs and Cybertruck ramp were still weighing on Tesla ’s auto margins, one of the metrics most closely watched. The EV firm reported a 14% margin in Q2, lower than consensus estimates.
Analysts also noted Tesla ’s management spent virtually no time to dispel worries about its stalling Auto business and preferred to focus on plans like Optimus, its Full Self-Driving (FSD) solution, and Robotaxi.
