Tesla valuation is ‘too optimistic’ states HSBC analysts

Credit: Berlinergy | X

Tesla [NASDAQ: TSLA] received a Reduce rating from HSBC analysts led by Michael Tyndall.

According to HSBC’s Tyndall, the market is too optimistic about Tesla. He clarified that “there is a fair degree of hope in the current share price.” 

As of this writing, TSLA stock is valued at $222.11 pre-market, down from the previous close of $222.18. The EV manufacturer’s market cap is $695.98 billion. HSBC analysts gave Tesla a $146 per share price target, implying a nearly 35% downside risk from the previous close. 

For comparison, Jefferies analyst Philippe Houchois reduced Tesla’s price target from $265 to $250 last month. He cited fears of dwindling leadership and concerns about industry and growth for his reduced price target.

Despite the financial firm’s bleak outlook on Tesla, HSBC also appears to have some hope for the Texas-based company. HSBC’s valuation model assumes Tesla will be successful in its multitude of projects by 2023, including Full Self-Driving, Dojo, and Optimus.

“We think, however, that the expected cost of capital for these businesses should be well above the group average given the regulatory and technological challenges they face,” wrote Tyndall in a client note. 

HSBC analysts expressed concerns over Tesla’s timeline for its projects. They specifically pointed to Tesla’s goal to reach 20 million electric vehicles by the end of 2030. The analysts also see Tesla CEO Elon Musk as an asset and a risk to the company. 

“Elon Musk’s global fame has afforded the group a customer awareness that far outweighs the money it has spent on marketing and advertising, which is, therefore, a tangible benefit to the P&L. Leaving aside the current legal issues Elon Musk faces, we think his prominence presents a considerable ‘single man’ risk at the group,” 

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Tesla valuation is ‘too optimistic’ states HSBC analysts
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