Tesla stock has received its fourth consecutive downgrade, which is not good news for investors. On Monday, the stock was seen falling in premarket trading. Goldman Sachs analyst Mark Delaney downgraded Tesla [TSLA] stock from Buy to Hold, while also raising his price target to $248 from $185.
Delaney’s downgrade was driven by valuation-based concerns. He wrote that after recent gains, shares were “now better reflecting our positive long-term view.” However, despite his downgraded rating, he is still optimistic about the electric-vehicle company.
Tesla shares surged more than $70, or about 40%, since late May due to deals with auto makers and NVIDIA’s [NVDA] AI business. However, Delaney is taking some of his chips off the table and there’s a price for everything.
As a result of the downgrade, Tesla stock was down about 2% in premarket trading to $251.35. The S&P 500 and Nasdaq Composite futures were also off 0.1% and 0.2%, respectively.
Delaney’s downgrade follows three other recent cuts, with Barclays analyst Dan Levy starting the trend on Wednesday when he cut his rating from Buy to Hold while raising his price target to $260 a share from $220.
Tesla Downgraded by Multiple Analysts
Several Wall Street analysts have downgraded their rating on Tesla’s stock. Jefferies analyst Dan Delaney cut his rating to Hold from Buy, noting that Tesla’s stock had reached “fair value.” Morgan Stanley analyst Adam Jonas followed suit, cutting his rating to Hold from Buy while raising his price target by $50 to $250 a share.
However, DZ Bank analyst Matthias Volkert took it a step further, double-downgrading Tesla to Sell from Buy. Most downgrades are one notch at a time, so this aggressive move is relatively rare. As a result of the negative calls, shares fell 3% to end the week. Volkert’s price target for the stock is $210, significantly lower than where it ended on Friday.
Investors have become overly optimistic too quickly for Wall Street analysts. A month ago, the average analyst price target on Tesla stock was about $190 a share, about $10 above where the stock was trading. Today, the average price target is $206 a share, which is about $50 below where Tesla stock closed on Friday.
Despite the downgrades, approximately 40% of analysts covering Tesla still rate its shares as a Buy. However, this falls far below the S&P500’s average Buy-rating ratio of about 55%. Earlier in the year, Tesla had more positive ratings, with roughly 64% of analysts covering the company rating its shares as Buy. Tesla started the year at $123.18 and has since gained over 108%.