Tesla Inc (NASDAQ:TSLA) shares shed more than 6% on Thursday after analysts at HSBC initiated coverage on the electric vehicle-maker with the equivalent of a ‘Sell’ rating and forecast the stock would fall about 30% from its current levels.
The analysts awarded the stock a ‘Reduce’ rating and a US$146 price target. Tesla shares traded down 6.3% at US$208.15 on Thursday afternoon. The stock is up 92.5% in the year to date.
The HSBC analysts noted that Tesla is an innovator in the EV space but raised concerns that its initiatives will not result in profits until the end of the decade.
They see the company’s goal of achieving 20 million deliveries by 2030 as the key medium-term challenge.
“We see considerable potential in Tesla’s prospects and ideas, but we think the timeline is likely to be longer than the market and valuation is reflecting. Hence the ‘Reduce’ rating,” the analysts wrote in a note to clients.
Further, the analysts pointed to CEO Elon Musk as posing a “singleman” risk to Tesla.
"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," they wrote.
"Leaving aside the current legal issues Elon Musk faces, we think his prominence presents a considerable 'singleman' risk at the group."
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