Tesla’s price target got slashed at Evercore ISI for the second time in a month on Wednesday.
The analysts’ persistent concerns surrounding demand and growth prompted the cut.
Tesla’s rich valuation can only be justified by extraordinary growth and execution, “both of which are question right now,” they said.
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For all the volatility, executive turnover, and legal battles, investors have awarded Tesla a pretty nice valuation relative to its luxury auto peers.
But Tesla’s worth is becoming harder to justify, even as it burns through cash as other automakers tend to do, Evercore ISI analysts argue in a new report.
Consider Tesla’s enterprise value is $53 billion — far richer than that of other luxury original equipment-manufacturer peers like Volkswagen’s $36 billion, BMW’s $15 billion, and Daimler’s $27 billion, Evercore analysts led by Arndt Ellinghorst said.
“The only thing that can justify such valuations is supernatural growth and best in class execution,” they added. “Both are in question right now.”
They continued: “Tesla is a car company. It needs and burns cash like a car company. The longer questions around execution and growth persist, the more difficult the valuation is to defend.”
For that reason, along with their unabated …read more
Source:: Businessinsider – Technology