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HSBC starts Tesla stock coverage at Sell, sees 35% downside risk; Shares dip

Published Nov 09, 2023 05:42AM ET
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© Reuters. HSBC starts Tesla stock coverage at Sell, sees 35% downside risk; Shares dip
 
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HSBC analysts initiated research coverage on Tesla (NASDAQ:TSLA) stock with a Reduce rating and a $146 per share price target.

The target implies nearly 35% downside risk from Wednesday’s closing price. HSBC’s valuation model assumes that Tesla’s businesses like FSD, Dojo, and Optimus are all successful by 2030.

“We think, however, that the expected cost of capital for these businesses should be well above the group average given the regulatory and technological challenges they face,” the analysts said in a client note.

Analysts see Tesla’s CEO Elon Musk as both an asset and a risk.

“Elon Musk’s global fame has afforded the group a customer awareness that far outweighs the money it has spent on marketing and advertising, which is therefore a tangible benefit to the P&L. Leaving aside the current legal issues Elon Musk faces, we think his prominence presents a considerable “singleman” risk at the group,” they wrote.

On the fundamental side of the business, the analysts see the timing of delivery as their primary concern. Tesla has ambitious plans to get to 20 million EVs by the year-end of 2030.

“We see considerable potential in Tesla’s prospects and ideas, but we think the timeline is likely to be longer than the market and valuation is reflecting. Hence the Reduce rating.”

Overall, the analysts say the market is too optimistic on Tesla as “there is a fair degree of hope in the current share price.”

Tesla stock is down 0.6% in pre-open Thursday.

HSBC starts Tesla stock coverage at Sell, sees 35% downside risk; Shares dip
 

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Comments (5)
Den Mor
Den Mor Nov 09, 2023 9:05AM ET
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This write up is ridiculously optimistic.
FMGK Blue
FMGK Blue Nov 09, 2023 7:38AM ET
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Sell Tesla vs Buy Stellantis
Tuan Pham
Tuan Pham Nov 09, 2023 7:19AM ET
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I read it and pulled down to see this same bank predicted NVDIA would lose 20%. See how good this HSBC is!
Jake Vee
Jake Vee Nov 09, 2023 7:08AM ET
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This is the same bank that launders money for Mexican cartels, right?
João Moreira
João Moreira Nov 09, 2023 6:39AM ET
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Finally a true and professional analysis to this stock.
 
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