Tesla Inc (TSLA.O) shares have soared to trillion-dollar valuations, leading analysts to criticize the stock.
After Morgan Stanley and Barclays, Goldman Sachs downgraded Tesla to “hold” on Monday. Tesla shares have risen 71% since late April and more than quadrupled this year, so brokerages boosted their price estimates.
Monday’s premarket trading saw E.V. maker shares fall 2%. Tesla’s $813.29 billion market cap dwarfs Toyota (7203.T), the world’s second-largest automaker.
The brokerages blame the surge, which has cost short sellers $12.68 billion this year, on the business profiting from A.I. buzz.
Tesla shares have also benefited from positive headlines in the previous two months, including partnerships signed with competitor automakers Ford (F.N.) and General Motors (GM.N) to access its charging network, which may make its chargers the industry standard.
Last week, China’s 520 billion yuan ($72.3 billion) tax cut program for EVs and other green cars boosted the stock.
“While the market is now giving the stock more credit for its longer-term opportunities, we are also cognizant of the difficult pricing environment for new vehicles that we think will continue to weigh on Tesla’s automotive non-GAAP gross margin this year,” Goldman analyst Mark Delaney said.
Morgan Stanley and Barclays warned that Tesla’s profitability was still in jeopardy due to competition in China and price cuts.
After weaker first-quarter margins, Jefferies and Truist Securities downgraded Tesla in April. The brokerages continued to expect robust growth from Tesla, the worldwide E.V. leader.