Tesla Shares Drop After UBS Downgrade on Concerns Over Rally
How does Tesla's valuation compare to other S&P 500 stocks?
Tesla's valuation is among the top 10 most expensive stocks in the S&P 500 Index, significantly surpassing other megacap technology companies. The stock trades at more than 80 times one-year forward estimated earnings, reflecting investors' high expectations for its AI potential and growth opportunities.
What new 12-month target price did UBS set for Tesla?
UBS set a new 12-month target price for Tesla at $197, down from the previous target of $147. This implies an 18% decline from Thursday's close. The adjustment was made due to concerns that Tesla's shares have risen "too much, too soon" based on optimism over its artificial intelligence plans1.
Why did UBS employ a higher P/E multiple for Tesla?
UBS employed a higher P/E multiple for Tesla due to the company's potential in the AI and electric vehicle markets. They believe that Tesla's initiatives in these areas have grown recently on AI enthusiasm, and the higher P/E multiple reflects the increased growth opportunities.