On Thursday, Tesla’s stock dropped to its lowest level in over a year due to Deutsche Bank expressing concern about the electric carmaker’s growing emphasis on its autonomous vehicle offerings during lean times.
Tesla Shares Fall:
In response to the brokerage downgrading the stock to “Hold” and lowering its price objective from $189 to $123, shares of the Elon Musk-led company slid 2.7% to $151.26. The brokerage’s comments come after a Reuters story from earlier this month stating that Tesla opted to keep working on Robotaxis on the same vehicle architecture as she shelved its long-promised low-cost car, which investors had believed would spur development.
Before the August introduction of Robotaxi, Tesla advocated for broader usage of its fully autonomous advanced driver assistance software. According to the brokerage, achieving complete driverless autonomy will be a significant technological, legal, and operational problem. “The delay of Model 2 efforts creates the risk of no new vehicle in Tesla’s consumer lineup for the foreseeable future, which would put downward pressure on its volume and pricing for many more years,” Deutsche Bank analyst Emmanuel Rosner said.
In an attempt to resurrect Musk’s massive pay package from 2018, Tesla fired over 10% of its global workforce earlier this week. The company’s profitability is being negatively impacted by price reductions made to increase demand for its electric automobiles. The business has requested that its investors confirm that they approve of Musk’s $56 billion salary, which was decided in 2018 but was denied by a Delaware judge in January. After losing 37.4% of its value this year, Tesla’s shares hit their lowest point in almost 15 months on Thursday, ranking it the second worst-performing stock on the S&P 500 index. If losses continue, its market capitalization is expected to drop by around $17 billion to roughly $478 billion. The business is still valued higher than any other automaker worldwide.
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