Tesla (NASDAQ: TSLA) shares fell over 1% Tuesday, falling a further 2.8% premarket Wednesday on the back of a research note from Bernstein, who maintained an Underperform rating and $150 price target on the stock.
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Tesla’s decline on Tuesday means the stock is now down 53% in 2022 and over 46% in the last 12 months.
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Bernstein analyst Toni Sacconaghi said in his note that Tesla “increasingly appears to have a demand issue.” He added that Tesla has responded by cutting vehicle prices in China and the US. and reportedly reducing production in China.
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In addition, Sacconaghi believes the price cuts in China and the US this quarter will negatively impact ASPs worldwide by approximately 2.6% or $1,400 per car, pointing to a 200 bps decrease in automotive gross margins. The analyst also thinks the net impact will be lower but believes consensus estimates for automotive gross margins improving 110 bps sequentially in Q4 may be at risk.
Furthermore, Sacconaghi went on to state that Tesla might need to make additional price cuts in 2023 in China to stimulate demand and will need to make permanent cuts in the US in order to qualify for IRA rebates.
Despite Bernstein’s current negative view on Tesla, the majority of analysts are bullish on the stock. According to TipRanks, 18 out of 28 analysts have a Buy rating on the stock, while eight have a Hold rating and two have a Sell bias. The average price target is $303.72, representing a potential 68.9% upside from current levels.
Earlier this week, Tesla said media reports that its plant in Shanghai will cut the December output of its Model Y were “untrue.”
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