What happened
An analyst's price-target cut on TuSimple Holdings (TSP) stock was the catalyst for its price tumbling by nearly 7% on Wednesday. That was a far steeper decline than was recorded by the S&P 500 index, which fell a relatively benign 0.2% on the day.
So what
The cutter in question was Ken Hoexter of Bank of America Securities. Before market open, he published a new research note in which he took a machete to his TuSimple price target.
The prognosticator now feels the stock is worth only $1 per share, well down from his former level of $2.50. He also reiterated his underperform (read:sell) recommendation. Hoexter's move comes on the heels of the autonomous trucking solutions developer's announcement that a once-promising joint development deal has been canceled.
Specifically, this was an arrangement signed with veteran auto industry mainstay Navistar in 2020. The deal was scotched on Tuesday, not long after TuSimple changed CEOs twice within a month, and then fired several members of its board of directors.
On the back of this highly discouraging development, Hoexter wrote, "In absence of a commercialization strategy, the long-term financial outlook for TuSimple is now far less visible."
Now what
The analyst charitably described the Navistar withdrawal as a "major negative event" for TuSimple. Many others, however, would consider it catastrophic.
TuSimple is still a relatively early-stage company involved in self-driving technology -- and for a niche auto category at that -- that needs all the partnership help it can get. It's also a speculative investment, at best, as we're still quite some distance from full autonomous-vehicle operation.
