Truist Securities downgraded its investment opinion on Tesla because of the electric vehicle maker’s willingness to cut prices and accept lower profit margins. The firm now views Tesla as a hold, down from a buy rating, and slashed its per share price target 37% — to $154 rom $245. That’s almost 6% lower than Thursday’s close of $162.99. Tesla reported disappointing earnings on Wednesday, noting a 24% decline in net income compared to the year ago period. Shares of the Austin, Texas-based company lost nearly 10% on the report, but are up about 0.2% pre-market trading Friday. TSLA YTD mountain Tesla stock is slightly higher so far Friday after a disappointing earnings report on Wednesday. “This willingness to accept lower margins highlights the degree to which TSLA’s value is more tied to its AI initiatives; however, it also diminishes the value of the core automotive business,” Truist analyst William Stein wrote on Friday. “This influences a sensitivity analysis around automotive EBIT margins…stimulating our downgrade to Hold.” Chief executive Elon Musk told investors on the company’s earnings call that Tesla is focusing instead on building a bigger fleet of vehicles as opposed to higher margins. “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here, versus a lower volume and higher margin,” he said. Early Friday morning, Tesla raised the prices of both the Model S and Model X , the company’s premium tier vehicles, just days after cutting prices for the sixth time this year on Model 3 and Model Y cars. Stein noted some positive takeaways from Tesla’s latest quarterly results, noting that the company is sticking with a target of producing 1.8 million vehicles this year as well as the forthcoming launch of the Cybertruck. — CNBC’s Michael Bloom contributed to this report.
