Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
On Monday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Tesla stock (NASDAQ:TSLA), reducing the price target to $430 from the previous $515, while maintaining an Outperform rating. The revision reflects a more cautious short-term view due to several headwinds affecting the electric vehicle (EV) maker’s sales. According to InvestingPro data, eight analysts have recently revised their earnings estimates downward, while the stock currently trades at a P/E ratio of 112, suggesting rich valuations. Tesla’s market capitalization stands at $804 billion, with the stock down 38% year-to-date.
According to Mizuho, Tesla’s sales in February 2025 in the United States, European Union, and China did not keep pace with broader market growth. In the U.S., Tesla’s sales dropped approximately 2% year-over-year, contrasting with a 16% increase in the overall market. The situation was more pronounced in China, where Tesla’s sales plunged around 49% year-over-year, while the market surged by about 85%. In Germany, the largest EV market in the EU, Tesla’s sales tumbled roughly 76% year-over-year, compared to a 31% market increase. InvestingPro analysis reveals that Tesla’s gross profit margins have weakened to 17.86%, though the company maintains a strong balance sheet with more cash than debt.
The firm attributes Tesla’s sales decline to various factors, including geopolitical tensions, waning brand perception in the U.S. and EU, increased competition in China, and lackluster demand for the refreshed Model Y. As a result, Mizuho has trimmed its delivery estimates for Tesla, projecting 1.8 million deliveries in 2025 and 2.3 million in 2026, down from the earlier forecasts of 2.3 million and 2.9 million, respectively. These updated estimates fall below the consensus forecasts of 2.0 million for 2025 and 2.3 million for 2026.
Despite the near-term challenges, Mizuho continues to view Tesla as a leading force in the EV and autonomous vehicle (AV) markets. The firm’s analysis suggests that Tesla’s current difficulties are tied to specific temporal and market conditions rather than fundamental issues with the company’s long-term growth trajectory.
In other recent news, Tesla has announced plans to produce a lower-cost version of its Model Y at its Shanghai factory, aiming to regain market share in China by 2026. This new model, part of a project codenamed "E41," will be at least 20% cheaper to manufacture and is expected to be sold primarily in China. Meanwhile, Tesla is collaborating with Baidu (NASDAQ:BIDU) to enhance its advanced driving assistance system in China, following customer feedback on a recent update. This partnership seeks to improve Tesla’s Full Self-Driving software by integrating Baidu’s mapping information, although financial details of the cooperation remain undisclosed.
Additionally, Tesla has voiced concerns over potential increased manufacturing costs due to trade wars, which could lead to higher tariffs on electric vehicles. The company has urged the U.S. administration to evaluate domestic supply chain limitations to prevent cost-prohibitive tariffs on essential components. In a separate development, Danish pension fund AkademikerPension has decided to blacklist Tesla over concerns regarding workers’ rights, planning to sell its remaining shares in the company. Lastly, Tesla faces competition from Xiaomi (OTC:XIACF), which is launching its first electric SUV, the YU7, designed to compete directly with Tesla’s Model Y.
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