BofA does not believe in growth of Tesla shares
2023.01.17 08:28
BofA does not believe in growth of Tesla shares
By Kristina Sobol
Budrigannews.com – Tesla (NASDAQ:) received a Neutral rating from Bank of America once more. and decreased its price target for the electric vehicle manufacturer from $135 to $130 due to the stock’s sharp decline since the end of 3Q22 amid investor concerns about demand and increased market competition.
Price reduction announcements in China, the United States, and Europe have exacerbated these concerns further. This is in addition to the media storm that has erupted since Tesla CEO Elon Musk’s acquisition of Twitter, which has acted as a distraction for TSLA management.
The announcement that TSLA will reduce prices on base models in China, the United States, and Europe by 6% to 20% or more has received the most attention recently. The auto industry will be affected by TSLA’s price reductions.
Compared to other OEMs like General Motors, the electric vehicle giant has higher margins (NYSE:). likewise Ford (NYSE:), and a cushion to further reduce costs. BofA does not anticipate this; However, at a time when they are attempting to increase production of EVs, these price cuts are likely to make business even more difficult for the majority of OEMs, who are currently losing money on EVs.
If EV pricing proves to be less favorable, analysts at BofA believe that OEMs will need to reevaluate investments and determine whether they generate sufficient returns. They anticipate that Ford and GM will continue on their current course, but they will have to look for ways to produce EVs at even lower costs.
Bank of America anticipates an 18% increase in expected revenue to $100 billion in 2023 due to a lower expected price per unit and an increase in volume estimates for 2023.
Tuesday morning in pre-market trading, shares of TSLA are up 3.04 percent.
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