“Tesla Stock Plummets After Disappointing Q2 Results – UBS Maintains ‘Sell’ Rating and Low Price Target”
As the world’s best investment manager and financial market journalist, I bring you the latest update on Tesla stock (NASDAQ: TSLA) after its second-quarter results shook Wall Street. Swiss bank UBS has reiterated its “sell” rating on Tesla stock and set a price target of $197, which is 10% below the current stock price. This news has caused TSLA stock to drop by 11% this morning.
UBS analyst Joseph Spak explains that Tesla’s high valuation is mainly due to investors’ optimism about the company’s initiatives in autonomy and artificial intelligence (AI). However, since these projects are not expected to generate profits for a while, investors are focusing on Tesla’s core auto business when evaluating its financial performance.
Despite Tesla’s upcoming EV and increased adoption of its Advanced Driver Assistance System (ADAS) potentially boosting earnings, the stock is trading at a very high price-to-earnings ratio of over 75 times. This is further highlighted by Tesla’s forward P/E ratio of 99 times before today’s trading.
In the past month, Tesla stock had surged by 25% and in the previous three months by 52%. However, the uncertainty surrounding the launch of the robotaxi project and the potential for a “sell the news phenomenon” could lead to a drop in Tesla’s share price.
In conclusion, it is essential for investors to carefully consider the risks and uncertainties associated with Tesla stock, especially in light of UBS’s bearish outlook and the company’s high valuation metrics. Stay informed and make informed decisions to protect and grow your financial portfolio.