Tesla’s mass-market Model 3 electric cars. Picture: REUTERS
Tesla’s mass-market Model 3 electric cars. Picture: REUTERS

Bengaluru — Top Wall Street brokerages Goldman Sachs and Morgan Stanley downgraded their ratings on Tesla saying the electric carmaker’s shares were overpriced, two days after the high-flying stock crossed $1,000 per share.

The brokerages, while reiterating that their long-term view on the stock remains positive, noted that the current valuation underestimates risks including increased competition in the electric vehicle (EV) industry.

Top automakers including General Motors and Ford have doubled down on their investments in the space by offering more EVs, aiming to cash in on a sector that is touted as the most promising alternative to conventional cars.

“We highlight risks to US-China trade, near-term demand, capital needs and tech competition as the key bear vectors we think deserve more attention,” Morgan Stanley analyst Adam Jonas said in a note on Friday.

Morgan Stanley cut its rating to “under-weight”, joining 12 other brokerages who recommend selling the stock.

Following Goldman Sachs’ downgrade to “neutral”, Tesla now has 12 analysts with a “hold” rating, and nine brokerages recommending “buy” or higher.

The bar for Tesla’s fundamentals is higher, Goldman analyst Mark Delaney said on Thursday, while increasing the price target to $950 from $925. Morgan Stanley cut its price target on Tesla’s stock to $650 from $680, in line with the median price target, according to Refinitiv data.

Tesla’s shares, which have jumped a whopping 360% in the past 12 months, were down nearly 1% in pre-market trading.


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