Tesla’s stock faces plenty of downside as the automaker’s strategy of slashing vehicle prices eats into profits without translating into substantially higher revenue, according to JPMorgan. Analyst Ryan Brinkman cut JPMorgan’s stock price target for Tesla through December 2024 by about 4% to $130, which would imply about 30% downside from Thursday’s close of $182.63. Shares of Tesla are currently trading for 56 times the 2024 consensus earnings estimate, according to FactSet, a valuation that JPMorgan worries can’t be justified by this kind of stagnant revenue growth. Tesla’s stock closed down 12% on Thursday after the automaker reported softer than expected earnings this week and warned that vehicle volume growth “may be notably lower” this year. “Tesla profit expectations have fallen, but even after Thursdays sell-off, the stock to us seems in comparison to have hardly noticed, suggesting plenty of further downside potential,” Brinkman told clients in a note on Friday. Tesla’s strategy of slashing vehicle prices has not translated into higher revenue. While vehicle volume grew by 20% in the fourth quarter, actual automotive revenue was basically flat at 1% growth compared to the year-ago period, according to JPMorgan. “Tesla did not trade profits for sales as measured in revenue — it has traded profits for sales as measured in unit volume,” Brinkman told clients. Profit expectations for Tesla have fallen substantially since October 2022 when analysts were forecasting $28.5 billion for 2024, according to JPMorgan. The analyst consensus now puts Tesla’s operating profit forecast this year at $11.4 billion. “But today Tesla shares are roughly the same price as they were in October of 2022 despite 2024 profit expectations having declined -60% in the time since then,” Brinkman wrote. JPMorgan rates Tesla as underweight, arguing that the automaker’s differentiated business, appealing products and cutting-edge technology “are more than offset by above-average execution risk and valuation that seems to be pricing in a lot.” “Although both technology and execution risk seem substantially less than was once feared, expansion into higher volume segments with lower price points seems fraught with greater risk relative to demand, execution, and competition,” Brinkman told clients. “Meanwhile, valuation appears to be pricing in upside related to expansion into mass-market segments well beyond our volume forecasts for the Model 3,” the analyst said.