Tesla plummeted again after UBS Group AG downgraded the stock due to market sentiment suggesting that the shares had risen “too much, too soon”. The carmaker has been working on optimisation of artificial intelligence (AI), which may have affected the downgrade.
Tesla Stock Falls Again For The Second Consecutive Day
Despite being a global top 10 most expensive stock on the S&P 500, TSLA sunk 1.6% lower in the US premarket trading this morning in New York after falling 8.4% yesterday afternoon. It broke its 11-day upward streak after announcing the postponement of its robotaxi project to October to allow teams to build additional prototypes. Last year, Tesla came under fire when a handful of vehicles drove off bridges while in autopilot mode, causing fatalities. UBS analyst Joseph Spak said:
If market enthusiasm for AI diminishes, this may impact Tesla’s multiple.
He added that the downgrade is warranted “given the lack of visibility and the risk that growth opportunities materialize on a longer time horizon”.
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Before Thursday’s fall, the megacap tech stock rose a mammoth 44% on Wednesday, with the market offering one final push to billionaire founder Elon Musk in the hope that he could transform the company’s AI department into a worldwide powerhouse.
UBS suggested that it is moving with the mounting concerns that too many AI-driven companies are receiving too high a valuation on the market. Tesla recently executed mass redundancies and the overnight selloffs from Wednesday through to Friday only solidify UBS’s decision to downgrade the stock.
