Tesla postponed its robotaxi unveiling to October, contributing to a significant drop in its shares
Tesla Inc. shares fell after UBS Group AG downgraded the stock, citing concerns that the shares had risen “too much, too soon” due to optimism over its artificial intelligence plans, according to BNN Bloomberg.
By 4:30 am in New York, Tesla was 1.6 percent lower in US premarket trading. The stock dropped 8.4 percent on Thursday, ending an 11-day winning streak. Tesla postponed its planned robotaxi unveiling to October from next month to give teams more time to build additional prototypes.
Among the 10 most expensive stocks in the S&P 500 Index, Tesla far exceeds the rest of the megacap technology cohort. Before Thursday’s decline, its shares had surged 44 percent through Wednesday on bets that billionaire founder Elon Musk could transform the company into an AI powerhouse.
UBS analysts, including Joseph Spak, wrote in a note, “If market enthusiasm for AI diminishes, this may impact Tesla’s multiple,” and downgraded their rating to sell from neutral.
They justified the downgrade due to “the lack of visibility and the risk that growth opportunities materialize on a longer time horizon (or not at all),” noting that the stock trades at over 80 times one-year forward estimated earnings.
UBS’s move reflects growing concerns over the valuations of companies linked to AI technology, shown by a recent selloff of Big Tech shares. Tesla also faces a subdued outlook for electric cars, affecting its sales and earnings.
The premium investors assign to Tesla for its various initiatives has increased recently due to AI enthusiasm. UBS analysts noted, “One would need to see an even larger opportunity to justify a buy rating.”
They raised their 12-month target on the stock to US$197 from $147, implying an 18 percent decline from Thursday’s close, using a higher price-to-earnings multiple than before to reach the new target.
