Analysts have expressed concerns that Elon Musk’s recent bid for OpenAI, the parent company of ChatGPT, is a distraction from the ongoing challenges faced by his electric vehicle company, Tesla.
Background
Musk’s bid for OpenAI is seen as a discount to the company’s October 2024 capital raise and is unlikely to lead to any discussion. The bid, valued at $97.4 billion, was refused by OpenAI CEO Sam Altman, who stated that the company would not be interested in selling.
Tesla’s Ongoing Challenges
Tesla, meanwhile, is facing increased competition in the electric vehicle market, and Musk’s political activity has risked alienating consumers and employees. The company has also seen a decline in registrations in the state of California, its largest market, for the fifth consecutive quarter.
Impact on Tesla Stock
Tesla’s stock has been on a downward slide for the past five consecutive days, with a decline of 18.6% over the past month. This reversal of fortunes comes after the stock had gained significantly following the election of Donald Trump as President.
Analysts’ Views
Despite the challenges faced by Tesla, analysts at Oppenheimer have maintained a “perform” rating on the company’s shares. However, other analysts, such as Gary Black, Managing Director of The Future Fund, have expressed concerns about the company’s future prospects. Black has cited investor worries about Musk’s involvement in the Department of Government Efficiency, Open AI, first quarter volumes, and commoditization of autonomy as contributing factors to the decline in share value.
Price Target
Black has maintained a price target of $380 for Tesla, which is significantly higher than the current share price of $328.5.
Conclusion
The concerns raised by analysts about Tesla’s struggles and Musk’s pursuit of OpenAI highlight the challenges faced by the company in the competitive electric vehicle market. As the company continues to navigate these challenges, investors will be watching closely to see how Tesla’s stock performs in the coming months.
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