In this article, we discuss the 5 stocks receiving downgrades from analysts. If you want to see more such stocks on the list, go directly to Analysts on Wall Street Lower Ratings for These 10 Stocks.
05. Tesla, Inc. (NASDAQ:TSLA)
Price Reaction after the Downgrade: +0.62 (+0.34%)
On January 26, within the automotive industry, Edward Jones revised its stance on Tesla, downgrading the stock from a “buy” to a “hold” rating. This adjustment came as part of a research report issued by the firm on Friday. Additionally, Tesla was removed from the Stock Focus List. Following this decision, the closing bell on January 26 showed a slight increase of 0.34% in the stock price. Edward Jones’s downgrade suggests a reevaluation of Tesla’s performance and prospects within the automotive sector. While the market responded with a modest increase in the stock price following the downgrade, Edward Jones’s move indicates a more cautious outlook for Tesla’s future performance. The removal of Tesla from the Stock Focus List implies a shift in priority within the firm’s investment recommendations.
Tsai Capital Corporation stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its fourth quarter 2023 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) ($248.48 – up 101.7% for the year. Recent high $299.29): Tesla has significant and underappreciated competitive advantages across multiple verticals including electric vehicles, software and energy storage. Misunderstood by much of Wall Street – and consequently a favorite of short sellers – Tesla continues to grow rapidly and increase its lead over the competition while delighting consumers in the process. Despite his unconventional (and sometimes off-putting) personality, Elon Musk is a visionary who has created enormous shareholder value. Musk is also a long-term thinker who has embraced the scale-economies-shared business model favored by Henry Ford and Jeff Bezos, intentionally reducing prices, increasing the customer value proposition and expanding the total addressable market. Tesla’s massive scale and cost advantages are now challenging the viability of legacy auto, which has hundreds of billions of dollars of outdated property, plant and equipment in a world that is rapidly transitioning to electric vehicles (EVs). While we expect competition for EVs to intensify and for Tesla to lose market share over time, we also believe the company will increase production and deliveries from approximately 1.8 million vehicles today to approximately 15 million vehicles in 2030 and further its lead in autonomous driving capability. In fact, we expect Tesla will eventually license its autonomous driving software, creating high-margin (70-80%), recurring licensing revenue. Tesla is also one of only two companies that dominate the energy storage market, which has the potential to grow to several hundred billion in revenue as power plants around the world increase their focus on renewable energy. Our investment in Tesla is aligned with our preference for companies that have strong balance sheets and the managerial skill to reinvest capital at high rates of return into large addressable markets.”
