- Tesla shares declined by about 5% on Thursday to close at $209.98 after HSBC initiated coverage of the EV maker with a “reduce” rating and a price target of $146 per share.
- HSBC analysts called Tesla CEO Elon Musk a “charismatic CEO with a cult-like following” who “feeds into the innovator narrative,” but questioned whether Tesla deserves its current valuation until it delivers on some of its high-tech promises for example, to sell a humanoid robot and autonomous vehicles.
- Besides the bearish HSBC note, Tesla is also facing increased pressure from a widening strike in Sweden, and is facing labor pressure (but no strikes) in the U.S.
Tesla shares closed down about 5% on Thursday at $209.98 after HSBC Global initiated coverage with a “reduce” rating and a $146 price target. In their note, HSBC analysts called Elon Musk both an asset and a risk to Tesla, noting he is a “charismatic CEO with a cult-like following” who “feeds into the innovator narrative.”
The analysts also pointed to “hope” that is already baked into Tesla’s share price around the company’s many ambitious future tech projects from its long-delayed driverless systems, to humanoid robots, and supercomputers. “Arguably the ideas need to become reality to support the current share price,” the analysts said.
On the bearish side, HSBC analysts wrote, “Significant delays or developments that show lack of technological and/or regulatory feasibility for a commercial launch of these projects pose a significant risk for Tesla.”
On the more bullish side, HSBC analysts said Tesla’s core, automotive business “faces fewer challenges than the incumbents and as such, deserves a premium.” They said, “EVs, by virtue of rising penetration, are a growth market and are likely to be for decades. Tesla is already the cost leader and given its stated ambitions (and scale), is likely to remain so.”
Also the bullish side for Tesla, they added, “A faster than expected development” in these areas “could lead to a re-rating of Tesla multiples,” as could “higher than expected market share gains driven by the price cuts we expect,” in Tesla’s core electric vehicle business.
Besides the “reduce” rating from HSBC, Tesla is also facing a widening strike in Sweden.
Swedish unions are pressuring Tesla with strikes and blockades over the company’s refusal so far to sign a collective bargaining agreement with employees in its service division, including technicians and mechanics who repair and maintain customers’ cars.
The IF Metall trade union, which represents some Tesla service employees, began a strike action at 12 Tesla service centers on Oct. 27, the New York Times reported. Dockworkers who are members of the Swedish Transport Workers Union have said they will not unload Teslas at ports in the region if the EV maker fails to negotiate a labor agreement by Nov. 17. And electrical workers who maintain the company’s charging stations, among other things, have also promised to strike starting on Nov. 17 if no agreement is met.
The labor action could potentially spread to Norway, according to reports by The New Republic.
Meanwhile, on Thursday, President Joe Biden spoke to UAW workers in Illinois, where he voiced support for the union leader’s ambition to strike collective agreements with Tesla, Toyota, and others.
UAW President Shawn Fain said in October during an online broadcast, “When we return to the bargaining table in 2028, it won’t just be with the ‘Big Three,’ but with the big five or big six.”
Tesla is also expected to host a Cybertruck event at the end of this month. While the specs and pricing for the final version of the Cybertruck have yet to be revealed, Tesla has allowed some Cybertrucks to be trotted around to promotional events. Auto critics including hobbyists and professionals have panned their build quality and design this week, The Autopian reported.