Tesla (TSLA) Stock Is Fully Valued with 20% Downside Ahead, Says RBC Capital


You might remember RBC Capital’s Joseph Spak as the analyst who asked Elon Musk too many ‘dry questions’ during Tesla’s (NASDAQ:TSLA) first-quarter earnings call, or at least as Musk described it.

Today, Spak is out with a new research note on Tesla shares after the electric giant announced that it had produced 5,031 Model 3 electric cars in the last seven days of the second quarter, beating its 5,000/week target.

Spak commented, “In our view, the efforts taken (tent, overtime) represent a burst rate, not a yet sustainable pace. Further, production will be lumpy as lines are tweaked and the Grohmann automated battery line is installed. In an effort to show sustainability/ improvement, company indicated 6k Model 3s/week expected late next month. Tesla stated GA4 was responsible for 20% of the Model 3s in the last week suggesting a rate of ~1k/week for the tent and ~4k/week for GA3. The company indicated they expect GA3 can hit 5k/week soon, which dovetails with the company’s 6k/week commentary. On quality, company indicated that it was not compromised however, a truer indication will be known when these vehicles hit the road.”

Bottom line, “Stock likely to experience some relief on achieving 5k Model 3/week since if this pace can be repeated, Tesla should turn into a self- funding company. However, we remain on the sidelines believing that a lot of the positives and a rosy future for the company are priced in.”

As such, Spak reiterates a Sector Perform rating on Tesla stock, with a price target of $280, which represents a potential downside of nearly 20% from where the stock is currently trading. (To watch Spak’s track record, click here)

TipRanks indicates Wall Street is evenly split between a battle of bulls vs. bears on this electro car giant giant. Out of 20 analysts polled in the last 3 months, 7 are bullish on Tesla stock, 8 remain sidelined, while 5 are bearish on the stock. The 12-month average price target stands at $306.64, which reflects a 9% downside from current levels.

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