Shares yesterday reached a record high and the group's market cap sped past the combined values of US car titans General Motors Co (NYSE:GM) and Ford Motor Co (NYSE:F) making Tesla the most valuable automaker in the US ever.
Shares added around 5% on Wednesday, closing at US $492.14, lifting its market cap to almost US$89 billion (General Motors US$50 billion, Ford US$37 billion).
But on Thursday analysts have lowered ratings on Elon Musk's group, despite the share climb.
Robert W Baird & Co analyst Ben Kallo has had a Buy equivalent stance on the shares since early 2016 but today puts on a Hold equivalent rating but upped the price target to US$525 from US$355.
He said in a note that the risk/reward for Tesla was 'more balanced' following the recent stock appreciation. He suggests investors now take profits.
Tesla shares have doubled in the last three months, or increased 101%, as investor optimism was primed regarding its vehicle deliveries, expanding production and profitability.
Meanwhile, research group CFRA downgraded the group to Sell from Hold after the bell last night but reiterated the US$400 price target.
Analyst Garrett Nelson sad shares had become overvalued after skyrocketing from a June low of under US$180 to a January high of nearly US$500 and that the recent price range die not fully reflect the near-term risks the company is facing.
"We see the recent China factory start-up weighing on Automotive gross margins in 1H 2020 and U.S. sales being negatively impacted by the recent phase-out of its federal EV tax credit, rising competition and seasonality," Nelson said in a note.
He added: "Tesla reported a surprise profit in the third quarter of 2019 but it hasn’t been able to string together more than two consecutive profitable quarters since it began producing the Model 3."
Meanwhile, yesterday, David Kudla, chief investment strategist at MainStay Capital Management, was quoted as saying that Tesla was "back to being a story stock" and that there was "a lot of good news out there."
"But there are still some problematic issues out there, chief among them is what will its sustained profitability look like, and when will it start to be valued like a car company and not a tech company," he said.
Tesla shares are down 0.59% to US$489.22 in New York on Thursday.