Tesla valuation ‘looks increasingly unsustainable’ post Q3 report, says JPMorgan

JPMorgan says Tesla (TSLA) reported Q3 results that “fell far below consensus expectations” in terms of revenue, automotive adjusted gross margin, automotive adjusted gross profit dollars, EBIT dollars, EBIT margin, EPS and “most of all” free cash flow. While bulls often frame trading profits for sales as “a conscious and crafty endeavor to gain scale,” Tesla has had to institute price cuts “only to sell fewer vehicles than analysts earlier expected,” JPMorgan tells investors. In addition, Tesla’s 7.5% EBIT margin in Q3 is “no longer standout” relative to Ford’s (F) Q2 EBIT margin of 8.4% and General Motors’ (GM) 7.2%, adding to the risks the firm sees for a valuation it views as “increasingly unsustainable” following the Q3 report. The firm continues to see “material downside” to its unchanged fundamentals-based December 2024 price target of $135, which it notes “still values Tesla as the world’s most valuable automaker.” JPMorgan keeps an Underweight rating on Tesla shares.