Despite a recent winning streak spanning 13 consecutive sessions on Wall Street and a $240 billion boost to the company’s valuation, Goldman Sachs just handed Tesla its fourth share downgrade of the month.
Last week, Morgan Stanley and Barclays analysts cut the Elon Musk-run company stock to equal weight.
Despite the analysts' reductions, Tesla’s price target was moved to $248 per share from $185, showing an increase in earnings-per-share estimates and a higher target multiple.
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Goldman Sachs said the bank remains positive about Tesla’s long-term growth potential and competitive positioning, while the 108% rally since Jan. 1, reflects Goldman’s bullish stance.
"Goldman's downgrade of Tesla joins a growing group of analysts that are ready to lock in some profit as the consumer weakens and the pricing market gets more difficult," Edward Moya, a senior market analyst at Oanda, told FOX Business.
"Tesla has experienced a robust rally, and it might be hard to deliver on current valuations," he continued. "Tesla could see a 10-20% drop before investors want to pile back in."
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Goldman Sachs pinned the bulk of the downgrade on valuation, while also highlighting the difficult pricing environment for new EV vehicles.
According to analysts, the pricing issue for EVs will hurt Tesla’s non-GAAP gross margin in 2023.
Goldman said it remains positive about EV adoption and identified the bulk of investing opportunities among suppliers with a higher capability of making the shift to EVs and electrification.
The analyst’s new price aim for Tesla suggests a 3% downside risk when compared to Friday’s closing price.
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Direxion’s Ed Egilinsky said despite Tesla’s year-to-date increase, "the 14-day Relative Strength Indicator (RSI) has been hovering around an overbought level throughout June."
"There is opportunity to take a short-term bearish view for traders believing the stock is currently overbought or if they're looking to hedge against their existing gains in the stock," he said.
Over the last month, Tesla shares are up roughly 26%.
