Tesla stock valuation 'still too high' says Bernstein, sees 30% downside risk

investing.com:

In 2024, the «Magnificent Seven,» a group of the biggest technology companies, saw most of its members continue their impressive 2023 performance, except for Tesla (NASDAQ:TSLA) stock. Facing a myriad of challenges such as waning sales and growing competition in China, Tesla stock has underperformed the S&P 500 by a wide margin.

Today, Bernstein analysts reduced their price target, suggesting a 30% downside risk for the stock.

Although Apple (NASDAQ:AAPL) is also one of the underperformers, TSLA has significantly lagged behind Magnificent Seven peers such as Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Nvidia (NASDAQ:NVDA), which continue to indulge in the ongoing artificial intelligence (AI) frenzy, significantly contributing to the market's overall success.

Notably, Microsoft recently joined the exclusive $3 trillion market value club, while Nvidia became the third most valued company in the world, overtaking Saudi Aramco (TADAWUL:2222).

For Tesla stock, however, 2024 hasn’t been nearly as good, with it plummeting more than 30% since the start of the year. The decline was partly driven by another disappointing earnings report in January, causing a sharp 12% fall in one day, the most significant drop in over a year.

Adding to Tesla's challenges, last week reports emerged of production cutbacks at its Shanghai facility, impacting both domestic and international supply.

This adjustment, which comes due to lackluster sales and intensifying competition in China, has led to reduced working days for employees, as per Bloomberg News. Employees are now working a five-day week, down from the previous schedule of 6 1/2 days, according to the report.

In China, despite a 17% rise in overall passenger vehicle sales and