At least four brokerages cut their price targets and earnings estimates, pointing to lower after the stock suffered its biggest annual loss since it went public in 2010.
The result “comes at the cost of higher incentives, which suggests lower prices and margins”JP Morgan said in a note, lowering the $25 price target to $125.
Shares of the electric vehicle maker were trading at $111.82, after losing 65% of their market value last year. The firm had a peak market capitalization of more than $1 trillion and now has one of around $390 billion.
Tesla is still the world’s most valuable automaker, even though its output is a fraction of that of rivals like Japan’s Toyota Motor Corp.
“Demand in general is starting to crack a bit for Tesla and the company will need to adjust and reduce prices especially in China, which remains the key to the growth story.”said Dan Ives, an analyst at Wedbush Securities.
In recent months, global automakers have struggled with falling demand in China, where the spread of COVID-19 has hurt economic growth and pressured consumer spending.
Tesla has tried to weather the pressure by offering deep discounts in the country, as well as a subsidy for insurance costs. The company also plans a reduced production schedule in January at its Shanghai plant, extending cuts – which began in December – until 2023, Reuters reported.
Source: Ambito
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