Goldman Sachs changed its recommendation for Tesla stock from “Buy” to “Neutral” in premarket trading on Monday. Goldman Sachs made this announcement shortly after Tesla’s market cap (the total value of all shares) hit $813 billion on Friday. 


Tesla’s stock price has surged in recent weeks as many of its rivals have embraced the company’s proprietary North American Charging Standard (NACS). Ford announced that it would be adopting NACS on May 25. GM made the same announcement on June 8, and Rivian followed suit on June 20. Since the Ford announcement on May 25, Tesla’s share price has soared by 39%. Following these impressive gains, Goldman Sachs believes that Tesla’s stock is no longer undervalued and therefore will flatline for an extended period. 


Another reason why Goldman Sachs has changed its recommendation is because of EV pricing challenges. In April, Tesla cut its EV prices by as much as $5,000. With more and more automakers entering the EV space, Goldman Sachs expects that Tesla will keep cutting prices as competition increases. 


However, Goldman Sachs’s long-term predictions for Tesla remain rosy. Even as it switched its recommendation from “Buy” to “Neutral,” Goldman Sachs raised Tesla’s 12-month forecasted share price from $185 to $248. Goldman Sachs also acknowledged Tesla’s leading position in the electric vehicle market and expressed confidence that the trend toward electric vehicles will continue.


On Friday, Tesla’s 50-day moving average stock price went above its 200-day moving average stock price, an event called a “golden cross.” Golden crosses signal to investors that the long-term trend of a stock is growth. In combination with other factors, golden crosses encourage investors to buy and hold a stock long-term. 


In addition, Tesla could outperform short-term expectations if more EV makers embrace NACS. It’s likely that this is exactly what will happen. Last Tuesday, Hyundai announced that it was considering adopting NACS.


It’s only a matter of time before Tesla becomes the first automaker in history to surpass a market cap of $1 trillion.