On Friday, HSBC (LON:HSBA) initiated coverage on shares of Tesla Inc (NASDAQ:TSLA) with a "Reduce" rating, alongside a price target of $124.00. The decision follows Tesla's recent announcement of its new autonomous vehicle, the Cybercab, at the "We, Robot" event held in Los Angeles on October 10, 2024. The vehicle is poised for a launch before 2027, with an expected price point near $30,000.
Tesla's Cybercab, a robotaxi designed without a steering wheel or pedals, has been set with an ambitious launch target. In addition to the Cybercab, Tesla plans to roll out unsupervised Full Self-Driving (FSD) features on its Model 3 and Model Y vehicles in Texas and California by next year. These developments are part of Tesla's broader push into autonomous driving technology.
The event also showcased Tesla's RoboVan, a concept vehicle intended for carrying both people and goods. Despite these announcements, the HSBC analyst pointed out that the event was "light on specifics." The analyst emphasized the lack of detailed information provided about the new products and their timelines.
HSBC expressed skepticism regarding the projected timelines and goals for Tesla's new ventures. The firm cited CEO Elon Musk's own admission of past overoptimism regarding product launch timings and Tesla's historical pattern of not meeting deadlines and pricing targets. The analyst's stance reflects concerns that the details shared by Tesla may be more indicative of aspirations rather than concrete plans.
The rating and price target set by HSBC suggest caution, highlighting the uncertainties surrounding Tesla's future product launches and the execution of its autonomous driving technology. The firm's stance is informed by Tesla's history and the recent product announcements, which appear to have left the analyst unconvinced of the company's ability to deliver on its ambitious goals within the suggested timeframes.
In other recent news, Tesla's earnings and revenue remain a focal point for investors as the electric vehicle giant recently announced its plans to launch the Cybercab in 2026. The company also revealed plans for unsupervised Full Self-Driving (FSD) in Texas and California by 2025.
However, analyst firms such as Stifel and Piper Sandler noted a lack of detailed information about the FSD technology and expressed concerns about the absence of a lower-priced vehicle. Tesla's ambitious plans also include the Robovan, a large autonomous vehicle for passenger or goods transport, and the Optimus robot.
Moreover, Tesla has converted 500 temporary positions into permanent jobs at its German gigafactory in Gruenheide, near Berlin. Despite these developments, analyst firms such as Roth/MKM, Truist Securities, and Morgan Stanley (NYSE:MS) maintain a cautious outlook due to the practicality of Tesla's unsupervised FSD technology and the lack of significant advancements in its technology.
However, firms like RBC Capital show optimism for Tesla's long-term prospects, particularly regarding robotaxis and humanoid robots. These are the recent developments shaping Tesla's trajectory in the electric vehicle and autonomous technology industry.
InvestingPro Insights
Adding to HSBC's cautious stance on Tesla, recent data from InvestingPro provides further context to the company's financial position and market valuation. Tesla's market capitalization stands at an impressive $711.19 billion, reflecting its dominant position in the electric vehicle market. However, the company's P/E ratio of 56.86 suggests a high valuation relative to its current earnings, which aligns with HSBC's concerns about the stock's potential overvaluation.
InvestingPro Tips highlight that Tesla is "trading at a high earnings multiple" and "at a high P/E ratio relative to near-term earnings growth." These observations support HSBC's skeptical outlook on the stock's current price levels. Additionally, the tip noting that "net income is expected to drop this year" could further justify the "Reduce" rating, as it may indicate challenges in maintaining profitability amid ambitious expansion plans.
It's worth noting that Tesla's financial health isn't all negative. An InvestingPro Tip points out that the company "holds more cash than debt on its balance sheet," which could provide some financial flexibility as it pursues its autonomous driving initiatives. For investors seeking a more comprehensive analysis, InvestingPro offers 19 additional tips on Tesla, providing a deeper dive into the company's financial metrics and market position.
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