Tesla Price Cuts Concern Analysts

Tesla (NASDAQ: TSLA) shares rose more than 7% on Tuesday, despite analysts expressing concern regarding the company's recent price cuts.

In a research note, Bernstein analyst Toni Sacconaghi told investors that Tesla's recent price cuts were in response to a demand problem.

He explained that his analysis shows Tesla's weighted average price cut globally year-to-date is 13.5% lower than third-quarter 2022 levels. “The price cuts have a HUGE impact” on Tesla's economics, argues Sacconaghi.

As a result, he is reducing his full-year 2023 earnings per share forecast from $4.96 to $3.80. He also added that, notably, the price reductions in China do not appear to have resulted in a significant surge in demand.

Elsewhere on Tuesday, BofA analyst John Murphy cut the firm's price target on Tesla to $130 from $135, maintaining a Neutral rating on the stock. Murphy said in a research memo that Tesla's stock is facing several headwinds, including demand concerns and increased competition in the electric vehicle market.

The analyst argued that these have been further fed by price cut announcements across China, the US, and Europe, and the stock appears fairly valued.

In addition, Jefferies analyst Philippe Houchois lowered his firm's price target on Tesla to $180 from $350.

The analyst, who kept a Buy rating on Tesla, said that while he believes the electric vehicle giant is leading the industry towards a better business model, the trajectory is “bumpier than we would like.”

Finally, Wells Fargo analyst Colin Langan said on Tuesday that Tesla's price cuts may force an industry-wide price correction. He believes the move could encourage buyers that previously have not considered Tesla. Langan has an Equal Weight rating and a $130 price target on Tesla's shares.