Tesla stock could hit new 52-week low after downgrade due to 'change thesis' shift

Tesla (TSLA) The stock fell on Thursday, hitting a new 52-week low, as the global electric car giant took a cut based on CEO Elon Musk's decision to prioritize its robotaxi software over a cheaper next-generation car.

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Deutsche Bank analyst Emanuel Rosner downgraded Tesla shares on Thursday to a hold rating from buy. Rosner also lowered the company's price target to 123, from 189, due to the “high probability” of a $25,000 Model 2 delay and the company's change of strategic priority to a robotaxi.

Rosner wrote that the previous buy rating was based on a $25,000 next-generation Tesla car coming in late 2025, which could allow the company to reaccelerate volume, margins and free cash flow.

However, Tesla's future now appears to be tied to “cracking the code on full driverless self-driving,” which represents a “major technological, regulatory and operational challenge,” according to Rosner.

The analyst added that the shift in focus to robo-taxis is a “change of the thesis” and that it could undergo a “potentially painful transition in ownership base” with EV investors “giving up” and “eventually being replaced by AI/technology investors.” “A much longer time horizon.”

Tesla stock fell 2.4% to 151.67 during Thursday's market action, hitting a new 52-week low of 148.70. This comes after Tesla stock on Tuesday fell 2.7% to 157.11, narrowing its 2024 low of 160.51 from March 14.

Meanwhile, Cathie Wood and her Ark Invest funds bought 20,683 Tesla shares on Tuesday and 66,504 TSLA shares on Wednesday, according to daily trading disclosures. Wood is ramping up Ark's Tesla holdings in 2024. Cathie Wood has long been bullish on Tesla's push for autonomy and robotaxis.

Tesla stock performance

TSLA stock rose 3.7% to 171.05 last week, buoyed by Elon Musk's promise to unveil a robotaxi on August 8. The previous week, Tesla stock fell 6.2% and Cathie Wood bought nearly 453,000 shares.

TSLA shares are trading below their 50-day moving average after falling about 13% in March.

Tesla stock is down in 2024, but at least it's cheaper, right? no

Meanwhile, analysts and investors are awaiting news on Musk's robotaxi and next-generation vehicle strategy during his upcoming first-quarter earnings call next Tuesday.

Analysts expect first-quarter earnings to fall 42% to 49 cents per share with sales down 4.5% to $22.27 billion. If Tesla's Q1 EPS comes out as expected, it will be the lowest quarterly level since the electric car giant hit 48 cents per share in the second quarter of 2021.

Tesla reported in early April that global deliveries in the first quarter totaled 386,810 while it produced 433,371 vehicles. Deliveries included a total of 369,783 Model 3 and Model Y units along with 17,027 “other” vehicles. Tesla's 386,810 deliveries in the first quarter undermine even the lowest estimates and represent the lowest quarterly deliveries since the 344,000 in the second quarter of 2022.

The electric car giant blamed the first-quarter performance on issues with ramping up production of the updated Model 3 coupled with factory closures.

The electric vehicle giant ranks eighth in the 35-member IBD Automotive Manufacturers Industry Group. The stock has a 32 Composite Rating out of the best possible 99 ratings. Tesla stock also has a 10 Relative Strength Rating and a 67 EPS Rating.

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