Goldman Sachs Downgrades Tesla Stock Again

June 26, 2023

minute read

Tesla Inc. experienced a decline in premarket trading on Monday as Goldman Sachs joined other analysts in advising clients to consider taking profits at this time.

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In a note to clients dated Sunday, the bank's analysts downgraded Tesla shares from "buy" to "neutral," citing their belief that the stock now better reflects the company's positive long-term growth prospects. Tesla shares fell 2.3% prior to the opening of the Wall Street market.

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The analysts, led by Mark Delaney, highlighted two key factors behind the downgrade. Firstly, they noted that the recent rally has led the market to assign greater value to Tesla's long-term opportunities. Secondly, they expressed concern about the challenging environment for new vehicles, which they anticipate will continue to impact Tesla's automotive non-GAAP gross margin throughout the year. Despite the downgrade, the analysts raised their price target for Tesla from $185 to $248.

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Following earlier price cuts, Tesla has been attempting to raise prices where feasible. The company's stock has made a strong comeback in 2023, surging 108% as investors have once again shown interest in technology stocks, particularly those associated with artificial intelligence, such as Tesla. Additionally, agreements that enable competitors like Ford to utilize Tesla's charging network have been viewed as positive developments for Tesla's shares, although some have raised questions about the potential long-term implications of such arrangements.

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These gains for Tesla follow a challenging period in 2022 when the tech sector experienced a downturn, leading to a 65% decrease in the value of the electric-car maker's stock.

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Last week, Tesla shares were also downgraded by other analysts. Morgan Stanley's previously optimistic analyst, Adam Jones, revised his rating to "hold" from "buy" while increasing the price target to $250 from $200 per share. Jones believes that Tesla will continue to reduce its auto prices as competition intensifies.

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