Add one more Wall Street bank to the short list of research shops calling for Tesla (TSLA) stock to fall from its current level.

HSBC analyst Michael Tyndall initiated coverage of Tesla on Thursday with a Reduce (or Sell) rating and $146 price target, implying a 33% drop in Tesla’s stock price. In response Tesla stock closed down nearly 5.5% on Thursday, with shares shedding 18.9% in the past month.

Tyndall praised Tesla as an innovator in the space, one unburdened by legacy costs holding down its expansion in the EV sector, which Tyndall wrote is definitely a growth sector. But while its reputation as an innovator is warranted, more than half of HSBC’s model for future cash flows is based on initiatives that likely won’t see profits until the end of the decade.

“We see considerable potential in Tesla’s prospects and ideas, but we think the timeline is likely to be longer than the market and valuation is reflecting. Hence the Reduce rating,” Tyndall wrote.

HSBC views Tesla differently than “conventional carmakers,” Tyndall said, because it has already become a cost leader in the EV space and with its growth ambitions it will likely remain the leader for some time. While its growth aspirations of 20 million units produced by 2030 are lofty, Tyndall wrote, questioning Tesla’s credibility is “problematic” because it has generally done what it promises, eventually. Tyndall does say the 20 million looks "too optimistic" at this point, however.

The main headwinds to the Tesla growth story, Tyndall said, are upcoming non-car products like fully autonomous software, Dojo supercomputer products and services, and robotics like the Optimus humanoids that are hard to model from a discounted, or future cash flow, perspective. Because these products and their markets are so nascent and the regulatory environment uncertain, Tyndall’s model can’t produce cash flow streams from those products until 2028, at the earliest.

“Our DCF [discounted cash flow] valuation is generous as we assume businesses such as FSD [full-self driving], Dojo and Optimus all become successful by the end of the decade, contributing around 40% of our DCF value. We think, however, that the expected cost of capital for these businesses should be well above the group average given the regulatory and technological challenges they face,” Tyndall wrote.

Indeed, for products like autonomous software, the industry is facing several headwinds. Tesla is under a NHTSA and Department of Justice investigation into its practices and touting features of its FSD software, currently in Beta testing, and its autopilot software that has been deployed to millions of vehicles. Tesla’s rival GM has had to shut down its Cruise autonomous service across the country, and just this week recalled its Cruise vehicles for safety updates.

Finally, Tyndall says Tesla CEO Elon Musk is a “risk” for the company, but not because of his controversial comments or non-Tesla pursuits such as running SpaceX and X.com (formerly Twitter).

“Musk’s global fame has afforded the group a customer awareness that far outweighs the money it has spent on marketing and advertising, which is therefore a tangible benefit,” Tyndall wrote. “Leaving aside the current legal issues Elon Musk faces, we think his prominence presents a considerable ‘singleman’ risk at the group.”

Tesla has recently made efforts to portray the company as one beyond just Elon Musk, parading out a slew of executives at its investor day in March and offering up more execs beyond Musk and former CFO Zachary Kirkhorn to speak up during earnings conference calls.

Nonetheless Tyndall believes Musk represents a key man, or “singleman,” risk to the company.

Musk and other issues aside, Tyndall and the HSBC team have also modeled a bull-case scenario for Tesla with a $280 price target. Tyndall wrote upside risks include faster-than-expected EV transition globally, continued market-share growth for Tesla, and a favorable regulatory environment for products like FSD.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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