Tesla’s stock has faced significant challenges, marking a historic downturn that has seen shares decline for an unprecedented seven consecutive weeks. Following Elon Musk’s recent engagement with the Trump administration, shares closed at $270.48 on Friday, reflecting a drop of more than 10% for the week and reaching their lowest point since Election Day on November 5, when they stood at $251.44. Since peaking at nearly $480 on December 17, the company’s market capitalization has plummeted by over $800 billion.
Analysts Adjust Tesla Price Targets
In a recent wave of evaluations, several major investment firms, including Bank of America, Baird, and Goldman Sachs, have revised their price targets for Tesla. Bank of America lowered its target from $490 to $380 due to apprehensions regarding declining vehicle sales and the absence of updates from Musk concerning a lower-cost model. Similarly, Goldman Sachs reduced its price target from $345 to $320, attributing this to a dip in electric vehicle sales across various markets including Europe, China, and parts of the U.S.
Competitive Challenges and Production Delays
Analysts have also highlighted Tesla’s struggle within a highly competitive landscape, particularly concerning its Full Self-Driving (FSD) software in China, where rivals typically do not require additional purchases for smart driving features. Baird has recently categorized Tesla among its “bearish fresh picks,” stressing that production delays related to the new Model Y would complicate timely supply fulfillment.
Musk’s Political Influence
Beyond financial metrics, the impact of Musk’s association with the Trump administration has raised concerns among investors pertaining to demand. Analysts at Baird acknowledged that “Musk’s involvement with the Trump administration adds uncertainty to the demand-side.” Given Musk’s breadth of responsibilities—ranging from his role in the administration to managing multiple private ventures like SpaceX and xAI—his political stance and activities are under increased scrutiny.
Rising Sentiment Against Musk
With Musk remaining a polarizing figure, sentiment against him and Tesla has surged, leading to protests and incidents of vandalism at Tesla facilities. Even vocal advocates have questioned the ethical implications of supporting Tesla under Musk’s leadership.
In a statement from Wedbush Securities, Dan Ives noted that “Tesla bulls find themselves with their backs against the wall,” acknowledging the challenge posed by Musk’s political affiliations on investor sentiment. Nevertheless, Wedbush saw the recent sell-off as a prime opportunity to list Tesla among its “Best Ideas,” setting an ambitious 12-month price target of $550. The analysts are optimistic, forecasting that new affordable models and advancements in autonomous technology could reinvigorate growth for the company.
Additionally, TD Cowen analysts expressed optimism about Tesla’s trajectory, suggesting that the company is poised for a significant product cycle in 2025-2026 that may rejuvenate sales and bolster stock sentiment.
- Seven-week consecutive decline in Tesla shares.
- Revised price targets from multiple investment firms.
- Increased competition in the EV market.
- Pivotal political role of Elon Musk affecting investor sentiment.
- Potential for future product cycles to stimulate growth.
While Tesla faces tremendous headwinds, including declining sales and the complexities surrounding Musk’s political involvement, analysts remain divided but hopeful regarding the company’s future prospects in the evolving electric vehicle landscape.
