Tesla’s stock fell 4% in late trading after a downgrading by Bank of America analyst John Murphy. The downgrade comes despite Tesla’s strong share price growth, which is up over 60% since April last year. However, Murphy notes that most of this gain has been driven by recent market trends rather than fundamental improvements.
Despite the downgrade, Murphy keeps his price target at $490 but warns of high execution risk. He expects Tesla to push its share of the global auto market to 5% in the long term, driven by the trend towards electrification and technological edge. The company’s lower cost structure and software features like full self-driving also contribute to its upside.
Murphy is particularly bullish on Tesla’s robotaxi launch, which he expects to be worth $420 billion in the US alone. However, success will depend on execution, including expanding testing and launching new products without major hiccups.
Possible upsides include licensing of self-driving software, tech breakthroughs, and potential federal or state incentives. The impact of CEO Elon Musk’s close relationship with President-elect Trump is also worth noting, as it could help secure a favorable regulatory environment for the company.
Source: https://finance.yahoo.com/news/bank-of-america-downgrades-tesla-stock-raises-price-target-saying-execution-risk-is-high-202959359.html