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Goldman Sachs Slashes Tesla’s Target Price Over Production Concerns

theguru Views  

Global investment bank Goldman Sachs has downgraded Tesla’s stock price. This reflects concerns about production issues and market conditions despite the price increase of Tesla’s main models.

On the 18th, Goldman Sachs lowered Tesla’s target stock price from $220 to $190, maintaining a neutral investment opinion.

The $190 is based on applying a 50-time multiplier to the updated earnings per share (EPS) estimate, including Stock-based Compensation (SBC). They also suggested a potential stock price drop of about $300 by applying 5060 times to the 2026 estimated EPS and about $6585 by applying about 30 times to the 2024 estimated EPS.

Goldman Sachs cited the decreased speed of production increase for the Tesla Model 3 and the shutdown time of the Berlin factory due to the Red Sea dispute and related power losses as reasons for the downgrade.

Also, citing reports from the China Passenger Car Association (CPCA) and Moto Intelligence, Goldman Sachs pointed out that Tesla’s key regional delivery estimates increased by single digits year-on-year in January and February but decreased by double from the previous quarter.

Goldman Sachs predicted Tesla’s delivery estimate for the first quarter of this year to be 435,000 units, a decrease from the previous estimate of 475,000 units. The total delivery forecast for this year was also lowered from the last estimate of 2.08 million units to 1.98 million units, an increase of 9.5% year-on-year.

According to Goldman Sachs’ analysis, the number of Tesla app downloads in the U.S. and Europe in January and February this year decreased sequentially compared to the fourth quarter of last year. Sensor Tower’s data shows the annual download count decreased from the previous year. Exports from Chinese factories also showed a decrease compared to last year.

Tesla’s stock price closed at $173.88, up 6.31% from the previous trading day, after news of the price increase of its main model. This is the most significant increase in about a month.

Tesla previously announced that it would raise the price of Model Y by about 2,000 euros (approximately $2,174) in some European countries from the 22nd. In the U.S., it plans to raise the price of all Model Y lines by $1,000 from the first of next month.

Tesla aggressively lowered prices from early last year to increase sales, but as a result, its operating profit margin significantly decreased. The operating profit margin for the fourth quarter of last year was about 8%, half of the same period of the previous year’s 16%.

theguru
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