BNP Paribas initiates Tesla stock coverage with Underperform rating

Investing.com - BNP Paribas Exane initiated coverage on Tesla (NASDAQ:TSLA) with an Underperform rating and a price target of $307.00, representing approximately 30% downside from current levels. The stock, currently trading at high multiples with a P/E ratio of 258.59, appears overvalued according to InvestingPro’s Fair Value analysis.

The research firm’s valuation approach incorporates Tesla’s artificial intelligence ventures, including Robotaxi and Optimus robot businesses, which currently generate no revenue but account for approximately 75% of their $1.02 trillion price target valuation. With a current market capitalization of $1.45 trillion and trailing twelve-month revenue of $92.72 billion, Tesla maintains a GOOD financial health score despite relatively weak gross margins of 17.48%.

BNP Paribas Exane’s analysis extends to 2040, with bull-case discounted cash flow models supporting a maximum Tesla valuation of $2.7 trillion, which is then adjusted through milestone probability assessments to arrive at their base-case valuation.

The firm’s projections include an active Robotaxi fleet of approximately 525,000 vehicles by 2030, 17 million cumulative Optimus robot deliveries by 2040 at over $20,000 per unit, and more than 11 million active Full Self-Driving subscriptions by 2030.

BNP Paribas Exane also conducted a comparative analysis of the "Magnificent Seven" tech stocks, concluding that Tesla’s current market valuation implies its 2035 earnings carry the same risk level as the other six companies’ 2026 earnings, despite 55% of Tesla’s projected 2035 earnings coming from businesses with no current sales. For deeper insights into Tesla’s valuation metrics and comprehensive analysis, including 20 key ProTips and detailed financial health scores, check out the full research report on InvestingPro.

In other recent news, Tesla has seen several notable developments. The company experienced a 2.8% increase in China-made electric vehicle sales in September, ending a two-month decline, as reported by the China Passenger Car Association. This growth was supported by the start of deliveries for Tesla’s new six-seater model in China, with sales of Model 3 and Model Y vehicles rising 9.2% from August levels. Additionally, Tesla’s Shanghai gigafactory, its largest manufacturing hub globally, has begun ramping up production for the fourth quarter, as announced by Tesla vice president Tao Lin. In terms of new product offerings, Tesla has registered plans for a longer-range variant of its Model Y, named "Model Y+," in China. On the financial front, Melius Research initiated coverage on Tesla with a Buy rating and set a $520 price target, highlighting the company’s potential to benefit from artificial intelligence disruption in the automotive industry. These developments reflect Tesla’s ongoing efforts to expand its market presence and product lineup.

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