Goldman Sachs Reiterates Neutral Rating#
Goldman Sachs has reaffirmed a Neutral rating on Tesla Inc. (NASDAQ:TSLA) with a price target of $375. This decision follows the company’s first-quarter results, which surpassed Goldman Sachs’ expectations.
Strong Performance in Q1#
Tesla's first-quarter performance was bolstered by improved profit margins in its Auto and Energy segments. However, some of this margin improvement was due to one-time benefits related to warranty and tariff accounting. Despite these gains, Tesla’s gross profit margin remains at 18%, which is lower than many of its industry peers.
Growth in Full Self-Driving Subscriptions#
In the first quarter, Tesla reported a notable 51% year-over-year increase in Full Self-Driving (FSD) subscriptions. The company also noted that there were no reported accidents involving its robotaxi fleet during February and early March, although the fleet size is still relatively small. Tesla anticipates that the rollout of its Unsupervised FSD feature will be available to consumers by late 2026.
Increased Capital Expenditure and Valuation Concerns#
Tesla has raised its capital expenditure guidance to over $25 billion and expects to experience negative free cash flow for the rest of 2026. Currently, Tesla's price-to-earnings (P/E) ratio stands at 359.68, with a market capitalization of $1.45 trillion. This suggests that the stock may be overvalued compared to its Fair Value, according to analysis.
In summary, while Tesla's recent earnings report showed strong performance with earnings per share (EPS) of $0.41 against an expected $0.36, concerns about profit margins and high valuation persist. TD Cowen has maintained a Buy rating on Tesla, setting a price target of $490, citing potential growth in autonomous vehicles and robotics as positive factors for the future.