Tesla looks like an ‘imbalanced VC portfolio,’ Jefferies says

Investing.com– Tesla Inc’s (NASDAQ:) recent reveal of its hotly anticipated robotaxi left investors underwhelmed, with Jefferies stating that a lack of clarity on the technology put focus back onto the electric car maker’s core operations. 

Jefferies still hiked the firm’s price target to $195 from $165, citing expectations of increased cash flow over the next two years, and maintained the stock at a Neutral rating.

But the brokerage raised concerns over Tesla’s governance and funding prospects in the medium-term. 

Jefferies said the firm’s Cybercab reveal “fell a bit flat,” citing no “tangible progress” on the technology and few details on plans to generate income through it. This brought focus back to the firm’s core auto business, which has been grappling with slowing deliveries, and is expected to log its first annual drop in deliveries in 2024. 

“Tesla remains a fascinating business in terms of innovation and drive but, more than ever, looks like an imbalanced VC portfolio solely funded by an auto business under pressure,” Jefferies analysts wrote in a note. 

The firm is set to report its third-quarter earnings after the bell on Wednesday. Tesla’s stock had tumbled earlier in October after its robotaxi reveal underwhelmed and as its third-quarter deliveries missed expectations. 

Jefferies noted that the lead in electric vehicles Tesla initially had over traditional automakers was now stagnating, and that its Chinese competitors were catching up.

The EV maker faces at least two years of “subdued growth” as its core models age and as it struggles to update its vehicle catalog, Jefferies said.