Tesla (TSLA, Financial) experienced a significant drop of 9.48% in its stock price today, reaching $237.78. This decline came after a Wall Street analyst lowered the price target for Tesla and maintained a sell rating.
UBS analyst Joseph Spak revised his price target for Tesla to $225, a reduction of $34. Spak also adjusted his first-quarter delivery forecast from 437,000 to 367,000 vehicles, citing decreased demand for the Model 3 and Model Y in certain markets. This new forecast suggests a 26% decrease quarter-over-quarter and a 5% decline year-over-year, alongside a projected 330 basis point drop in Tesla's auto gross margin to 10.3%, excluding credits, compared to 16.4% in Q1 2024. These issues have heightened concerns about Tesla's performance in key markets such as Europe and China.
In terms of valuation, Tesla (TSLA, Financial) is currently trading at $237.78, with a market capitalization of approximately $764.82 billion. The company's price-to-earnings (P/E) ratio stands at 116.56, which is relatively high, indicating that the stock may be priced for strong future growth. Tesla's GF Value suggests it is fairly valued, with a GF Value of $259.15. For more information, you can refer to the GF Value.
Despite current pressures, Tesla exhibits strong financial strength, demonstrated by its strong Altman Z-Score of 12.22. The company also maintains a robust equity-to-asset ratio of 0.60. Notably, Tesla's cash-to-debt ratio at 4.45 highlights its prudent debt management. However, the company does face challenges in profitability, underscored by a return on invested capital (ROIC) of 9.26%, which is below its weighted average cost of capital (WACC) of 15.42%.
Tesla's revenue growth has slowed, with a 0.6% increase over the past year, although it boasts a five-year revenue growth rate of 29.6%. Analysts remain cautious, as Tesla's earnings growth has seen a 22.7% decline over the past year, contributing to increased market scrutiny and a reevaluation of growth expectations. Going forward, investors should closely monitor Tesla's ability to navigate these headwinds and improve its financial metrics.
