On Monday, Truist Securities reaffirmed its rating on Tesla (NASDAQ:) shares with a $215.00 price target, leaving the company's stance unchanged after Tesla's second-quarter earnings report, and executives at the electric carmaker echoed previous sentiments about its Full Self-Driving (FSD) program.
During Tesla’s first-quarter earnings call earlier this year, CEO Elon Musk emphasized the importance of the company’s efforts to improve its self-driving technology, of which Truist Securities had previously obtained FSD version 12, which it described as “impressively built.” But it still hasn’t been put to practical use. In its latest earnings call, company executives reiterated those earlier statements, prompting Truist Securities to evaluate what it believes is an updated FSD version 12.3.6.
The updated software comes across as very well made. But it still lacks full autonomy. Truist reports that it has noticed some limitations in the new version that pose a significant challenge to Tesla’s self-driving goals. The company has expressed skepticism about the developments Tesla might present at its upcoming RoboTaxi event, scheduled for October.
Truist’s analysis suggests that while Tesla’s FSD technology is showing significant improvements, it’s not yet at the level of autonomous driving. Analyst comments reflect a cautious view of the immediate utility of Tesla’s FSD program, even while acknowledging its impressive design.
In other recent news, Tesla continues to dominate the electric vehicle market despite recent challenges, according to Argus and Morgan Stanley, the company’s latest earnings report revealed a weaker-than-expected second quarter. This was impacted by weaker deliveries and increased spending on research and development.
The company’s plans to produce a new generation of low-cost electric cars priced between $25,000 and $30,000 are seen as a positive step that could help maintain or expand its market leadership. Tesla is also expected to benefit from tax breaks for electric car purchases made as part of the inflation-reducing measures.
Morgan Stanley maintains its overweight rating on Tesla, citing its revenue growth. However, the firm acknowledged that negative trends in the global electric vehicle market could have an impact on Tesla’s share price in the near term.
Recent developments point to a major sell-off in technology stocks. This was driven by disappointing earnings reports from Tesla and Alphabet, which increased interest in small and mid-cap companies and safer assets. These events highlight the volatility in the technology sector and the potential for further instability, however, some analysts remain optimistic about the long-term outlook for technology stocks. They suggest that the current correction is part of a normal market cycle.
InvestingPro Insights
As Tesla (NASDAQ:TSLA) continues to refine its Full Self-Driving software, investors and analysts are closely watching the company's financial and market performance, according to data. InvestingPro Tesla has a strong market cap of $702.18 billion. This confirms its significant presence in the automotive industry. Despite concerns about its self-driving capabilities, Tesla maintains a high price-to-earnings ratio of 61.8, reflecting investors’ confidence in its long-term growth potential. Moreover, the company’s trailing-twelve-month revenue growth as of Q2 2024 was 1.37%, indicating continued sales growth.
Among the tips InvestingPro Two things stand out in particular in the context of the article: First, Tesla has more cash than debt on its balance sheet. This provides a solid financial foundation as it continues to invest in developing FSD technology. Second, despite the challenges of achieving full autonomy, Tesla remains the dominant player in the auto industry. This could bode well for future opportunities. Especially with the upcoming RoboTaxi event.
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