Is it a classic case of too much too soon for bullish Tesla?
Top Wall Street brokerages Goldman Sachs and Morgan Stanley downgraded their ratings on Tesla Inc saying the electric car maker's shares were overpriced, two days after the high-flying stock crossed $1,000 (roughly R16,991) per share.
The brokerages, while reiterating that their long-term view on the stock remains positive, noted the current valuation underestimates risks including increased competition in the electric vehicle industry.
Top car makers including General Motors Co and Ford Motor Co have doubled down on their investments in the space by offering more electric vehicles, aiming to cash in on a sector that is touted as the most promising alternative to conventional cars.
“We highlight risks to Sino-US trade, near-term demand, capital needs and tech competition as the key bear vectors we think deserve more attention,” Morgan Stanley analyst Adam Jonas said in a note on Friday.
Morgan Stanley cut its rating to “under-weight”, joining 12 other brokerages who recommend selling the stock.
After Goldman Sachs' downgrade to “neutral”, Tesla now has 12 analysts with a “hold” rating, and nine brokerages recommending “buy” or higher.
The bar for the automaker's fundamentals is higher, Goldman analyst Mark Delaney said on Thursday, while increasing the price target to $950 from $925.
Morgan Stanley cut its price target on Tesla's stock to $650 from $680, in line with the median price target, according to Refinitiv data.
Tesla's shares, which have jumped a whopping 360% in the last twelve months, were down nearly 1% in premarket trading.