Tesla's Selloff Continued As Its Stock Plummeted 12% On Wednesday
After disappointing Q2 earnings, Tesla's stock was heavily sold off on Wednesday. As the market closed on Wednesday, the stock fell by more than 12%, marking the largest single-day drop since September 2020.
The latest financial report from Tesla shows that the company's profits have declined for the second consecutive quarter. Due to price reductions and increased spending on artificial intelligence (AI) projects, Tesla's profit margin has dropped to its lowest level in five years. The much-anticipated Robotaxi by Musk will also be postponed until October.
After the release of the financial report, Goldman Sachs and Citigroup successively lowered their target prices for Tesla. However, Dan Ives, an analyst at the Wall Street investment bank Wedbush Securities, believes that there are still many optimistic aspects for Tesla, and the real growth story lies in its ambitions in AI.
Ives predicts that Tesla's artificial intelligence robot taxi plan will pave the way for new growth, and its highly anticipated low-cost model will boost sales.
The mojo is back at Tesla, he wrote on X, reiterating Wedbush's target price of $300 for Tesla. This means Tesla's shares would rise by about 39% from the current level.
At the financial report conference call on Tuesday, Musk announced that Tesla's Robotaxi will be postponed to October 10th, two months later than the previous release date of August 8th. Musk did not give a clear timetable for regulatory approval, but he said he would be shocked if the first autonomous taxi could not be realized next year.
However, Ives did not stop because of the lack of clarity. He estimates that the robot taxi will be launched next year, and once launched, it will unleash the beginning of the AI story at Tesla. He expects Tesla's valuation to reach $1 trillion.
In a report released on Wednesday, he emphasized that the next phase of the Tesla growth story is around autonomous, Robotaxis, and AI playing out,
Ives also believes that Tesla's plan to launch a low-cost electric car will drive sales growth in the next few years. Although Musk did not give clear details, he said that a model with a lower cost will be launched in the first half of 2025, with a price of less than 30,000 US dollars.
However, other analysts are still more cautious. In addition to Goldman Sachs and Citigroup, Bank of America in a report released on Wednesday lowered its target stock price for Tesla from $260 to $255, citing Tesla's lower gross margin, but said that the company still has a number of catalysts ahead that could help drive the stock.