By Senad Karaahmetovic
Wolfe Research analysts downgraded Tesla (NASDAQ:TSLA) stock to Peer Perform from Outperform.
While the analysts remain positive on Tesla's long-term opportunity and "impressive cost trajectory," they grow increasingly concerned about macro challenges facing the electric vehicle (EV) maker.
"Tesla has already had to cut prices quite a bit more than we expected. And we worry that that macro challenges are intensifying in ways that could disproportionately affect US EV makers," they wrote in a client note.
After the spectacular collapse of Silicon Valley Bank, Wolfe analysts warn that this hole isn't likely to be filled immediately while credit is likely to tighten. They remind investors that California accounted for about a third of US sales in 2022.
"We believe there's risk that tech spending will slow down even faster, and there will be larger layoffs. W/r/t Tesla and Auto stocks, we don’t believe that a precise view on the Macro outcome is possible at this point in time. Autos are durable goods, and their purchases are deferred when consumers feel less financially secure. Recent events further deepen the uncertainty for the Tech Sector, Startups, Financial Institutions, and many non-Tech California businesses," the analysts added.
They fear that the weaker demand trend "could get worse if Sentiment takes another hit." Moreover, the analysts note that Tesla's 2023 outperformance means that it was trading close to their old price target of $185 per share.
Tesla stock is up over 1% in pre-market Monday.