BofA Global Research has downgraded Tesla (TSLA) from "Buy" to "Neutral," citing valuation concerns and execution risks, despite raising the price objective to $490 from $400. The report highlights that Tesla's current trading levels already reflect much of its long-term potential, particularly in its core automotive, robotaxi, and energy sectors. The robotaxi segment, expected to launch in 2025, is a significant growth driver, accounting for approximately 50% of Tesla's valuation. BofA notes, "Robotaxi offers largest oppty; Now ~50% of TSLA's val'n," emphasizing its potential to offer lower-cost rides with higher margins compared to traditional rideshare services.
The report also underscores the importance of Tesla's Full Self-Driving (FSD) technology, which could be worth $480 billion and is in the early stages of monetization. Despite these growth prospects, BofA expresses caution due to high execution risks, including the introduction of new models, the robotaxi launch, and potential policy changes. The report states, "Catalyst path could support stock, but execution risk high," reflecting the challenges Tesla faces in realizing its ambitious plans.
As of January 8, 2025, Tesla's stock was trading at $395.82, up 0.37% from the previous close.