Shares of Tesla (TSLA -9.96%) are falling on Thursday. The electric vehicle maker’s stock lost 9.5% as of 11:50 a.m. ET after gaining double digits yesterday. The slip comes as the S&P 500 and Nasdaq Composite lost 4.2% and 5.3%, respectively.
UBS lowered its price target for Tesla stock citing concerns with its energy business in China.
UBS sees Tesla going lower
Analysts at the investment bank UBS lowered their price target from $225 to $190 for Tesla stock. Trump’s tariffs, especially those placed on China, and their reciprocal levies are causing chaos in Tesla’s supply chain. Even though most of Tesla’s manufacturing happens within the country in which the cars are destined to be sold, many parts and materials make their way across borders in the process.
UBS is especially concerned with how the escalating trade war with China could impact Tesla’s energy business — one of the only bright spots in its last earnings report. Although the $190 price target represents a steep drop from the stock’s current price, UBS warned that it could revise the target lower after more is revealed in the company’s next earnings announcement.
Tesla’s stock is expensive
Even without the complications the trade war introduces, Tesla’s sales have been slipping. And while the company has big plans, for the foreseeable future, the vast majority of its income comes from selling cars. With a price-to-earnings ratio (P/E) of more than 130, the market is valuing Tesla like a high-growth software company, not a car producer.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
