Shares of Tesla Inc. (NASDAQ:TSLA) plunged to their lowest level in over a year on Thursday following concerns raised by Deutsche Bank about the electric automaker’s increasing emphasis on its autonomous vehicle endeavors amid financial pressures.
The stock, led by Elon Musk, dropped by 2.7% to $151.26 after the brokerage downgraded it to “Hold” and slashed its price target from $189 to $123. Deutsche Bank’s commentary comes in the wake of a Reuters report earlier this month revealing Tesla’s decision to scrap its long-anticipated affordable car, which investors had hoped would drive growth, while continuing to pursue Robotaxis using the same vehicle platform.
Tesla has been aggressively promoting its full self-driving advanced driver assistance software in anticipation of unveiling Robotaxi in August. However, Deutsche Bank highlighted the formidable technological, regulatory, and operational challenges in achieving full driverless autonomy.
Analyst Emmanuel Rosner cautioned that the delay in Model 2 development poses a risk of no new vehicle in Tesla’s consumer lineup for the foreseeable future, potentially dampening its volume and pricing prospects for years to come.
As Tesla grapples with profitability issues stemming from price cuts aimed at boosting demand for its electric vehicles, the company recently initiated layoffs affecting over 10% of its global workforce. This move comes as Tesla seeks to revive Musk’s massive $56 billion pay deal from 2018, which was rejected by a Delaware judge in January.
With a 37.4% decline in share value year-to-date, Tesla shares hit their lowest level in nearly 15 months on Thursday, positioning it as the second worst-performing stock on the S&P 500 index. Despite this downturn, Tesla remains the world’s most valuable automaker, although its market capitalization is poised to drop by over $17 billion to approximately $478 billion.
Featured Image: DepositPhotos
