The recent sell-off in shares of Tesla Inc (NASDAQ: TSLA) is not entirely unjustified, says Philippe Houchois. He’s a Senior Analyst at Jefferies.
Jefferies’ updated Tesla stock price forecast
On Wednesday, Houchois downgraded the electric vehicles company to “hold” and slashed his price objective to $185.
The analyst attributes his Tesla stock price forecast to Elon Musk shifting focus from margins to volumes.
However fascinating the investment case remains, relative price aggression is not supportive of a high multiple investment case while unfolding.
Last week, the Nasdaq-listed firm said about half a dozen price cuts this year resulted in an 800-bps year-on-year hit to its automotive gross profit margin in the first quarter as Invezz reported HERE. Tesla shares are still up 45% for the year.
Tesla needs to improve in marketing and planning
Houchois agreed that it made sense for Tesla to focus on volumes since the EV giant wants to be selling 20 million vehicles per year by 2030.
But that transition, the analyst noted, was unlikely to bear good news for Tesla shares. His research note also said:
With multiple technical edges from software to batteries and manufacturing productivity, Tesla clearly overperforms on engineering but has fallen behind in building skills in marketing and product planning.
Several other automakers have already launched their electric vehicles in the market. Rising competition could be another headwind for TSLA moving forward. Nonetheless, Houchois’ Tesla stock price forecast still suggests about a 20% upside from here.
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