Analysts at Philip Securities are recommending selling Tesla shares as there is little to be excited about following its latest quarterly earnings report. The analysts have set a price target for TSLA at $135, which implies a potential downside of nearly 40% from current prices, investing.com reports.
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The rating downgrade is due to several significant issues, including lower-than-expected vehicle deliveries and price cuts, reduced profits in the auto sector, and “limited discussion” by Tesla management of near-term issues.
Tesla's electric vehicle deliveries increased 15% quarter-on-quarter, driven by a sixth consecutive quarter of lower EV prices and favorable financing conditions. However, compared to the same quarter last year, deliveries were down 5%, the second consecutive quarter of year-on-year declines, reflecting a persistent lack of strong demand.
Strong competition, particularly in China, remains a concern, and the possibility of reduced tax credits under the Inflation Reduction Act if former President Trump is re-elected could also weigh on U.S. demand. Automotive revenue fell 7% year-over-year.
Additionally, the gradual ramp-up of Cybertruck production and EU tariffs are weighing on Tesla's closely watched auto profit margins. The EV leader reported a 14% margin in the second quarter, missing expectations.
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