Experts say Tesla stock valuation could fade in the coming months; Here’s why

Tesla (NASDAQ: TSLA), the electric vehicle (EV) and clean energy company, has recently been facing pressure on its profit margins due to unprecedented price cuts, leading some experts to predict a potential fade in its stock valuation in the coming months

Analysts at Piper Sandler reiterated an ‘Overweight’ rating on Tesla earlier this week and trimmed their price objective on the stock to $280 from $300 per share. 

As Tesla’s margins continue to face pressure due to unprecedented price cuts, analysts believe the valuation could fade in the coming months. That said, the stock may struggle to see significant upward movements until margins and other fundamentals recover, Piper Sandler analysts said.

The move comes after Tesla’s recent 10-Q filing with the US Securities and Exchange Commission (SEC) revealed the carmaker intends to increase its capital expenditures for the following two years amid its plans to build a new factory, launch a new vehicle platform, and continue hiking production at its car plants to reach a landmark goal of 20 million vehicles annually by the end of 2030.

Tesla chart analysis

Shares of Tesla fell roughly 1% on Tuesday, May 2, closing the session at $160.31. The stock was slightly up in premarket trading on Wednesday, standing at $160.84 ahead of the market open. 

Tesla’s stock price has been on a downward trajectory in the past month, losing around 20% since the start of April.

While the company’s shares have experienced notable volatility in recent months, TSLA remains up more than 48% since the start of the year. The rebound comes after Tesla reported Q4 financial results that beat consensus estimates and announced plans to raise production. 

Based on TipRanks’ summary of all technical indicators on the 1-day gauges, the carmaker’s stock is currently rated as ‘Sell,’ with 12 being bearish on the stock, while only 6 remain bullish. Moving averages (MAs) suggest that TSLA is a ‘Strong Sell,’ while oscillators maintain a ‘Buy’ rating.

TSLA price drop

The small price drop comes after the world’s biggest EV maker raised prices in a range of up to $290 in the US, Canada, Japan, and China, according to the company’s official website. 

Tesla hiked the starting price by $250 on the base model of Model Y and Model 3 vehicles in the US, the company’s biggest market. The company raised the prices of these models by roughly the same margin in China, Japan, and Canada. 

This was the first time Tesla raised car prices after a series of significant price cuts this year by the automaker as part of its efforts to drive demand. 

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