Tesla’s shares have seen a sharp decline in April, partly due to the company’s first-quarter financials revealing a greater than expected retraction in gross margins. Another analyst has now downgraded the stock, suggesting that the electric vehicle giant may require a “reset” and questioning whether its big profits were only temporary. Jefferies analyst Philippe Houchois has cut the firm’s rating for Tesla from “Buy” to “Hold,” and reduced the stock price target to 185 from 230. While Tesla’s growth-over-margin strategy has “logic and resets expectations,” it raises questions about whether the profit edge was structural or a timing difference, according to Houchois. He also suggested that the company’s transition to sustainable energy and resource efficiency could slow down EV penetration and accelerate profit normalization for the industry.
Other analysts have also revised their price targets on Tesla stock following the company’s first-quarter earnings, with most trimming their forecasts. Tesla’s shares have fallen over 22% in April, and the company’s gross margin miss and Elon Musk’s warning of more declines have contributed to the decline.