With a year-to-date decline of about 28.5%, Tesla (NASDAQ:TSLA) is the worst-performing S&P 500 stock. Despite this downturn, a few analysts believe Tesla’s valuation is still high, suggesting more pain ahead for TSLA shareholders.
Bernstein analyst Toni Sacconaghi cut his price target on Tesla stock to $120 from $150. Sacconaghi maintained a Sell rating on the stock on March 26, citing soft demand in China and Europe. Additionally, Sacconaghi adjusted his Q1 and Fiscal 2024 delivery forecast lower for Tesla. He highlighted that Tesla stock price appears overvalued across various metrics compared to peers.
Echoing similar sentiments, GLJ Research analyst Gordon Johnson reiterated a Sell on TSLA stock on March 26. With a price target of $23.53, he suggests a substantial downside potential for TSLA stock. Johnson points out that Tesla’s valuation continues to be higher than that of its leading competitors despite only selling a fraction of their total vehicles. Due to this combination of lower demand and lofty valuation, Johnson sees Tesla stock as the best shorting opportunity.
Is Tesla a Buy, Sell, or Hold?
Tesla’s earnings are set to decline in the short term due to the softening demand for electric vehicles (EVs) and pressure on margins. While Elon Musk’s plan to offer a one-month trial of its Full Self-Driving technology boosted TSLA stock, Barclays analyst Dan Levy believes the company is also making efforts to shift the focus away from its auto business, which is under pressure. The underlying weakness in demand could continue to pressure its margins and share price.
Given the headwinds, analysts are sidelined on Tesla stock. Tesla has 10 Buys, 18 Holds, and six Sell recommendations for a Hold consensus rating. Analysts’ average TSLA price target of $207.74 implies 16.92% upside potential.
