Some prominent Tesla supporters have shifted to bearish sentiments
In this modern era, Wall Street's Tesla enthusiasts are feeling the heat. They're beginning to question if the future's as bright as it used to be, echoing the famous quote from sports legend and shrewd investor Yogi Berra.
Recently, even Tesla's most ardent analysts are switching gears. They're lowering their optimistic 12-month price targets and ringing the alarm bells over the fallout from controversial CEO Elon Musk's public support of President Trump.
Not too long ago, analysts at Deutsche Bank, RBC Capital Markets, Stifel Nicolas, and Piper Sandler reduced their price targets for Tesla. Then, on a Sunday surprise, Dan Ives of Wedbush Securities dropped his 12-month price target by an astonishing 43%, landing at $315. This moved sent (TSLA) shares tumbling more than 7% to as low as $222.24 in the morning, amid a volatile stock market - before recovering slightly in the early afternoon. The slide follows a drop of more than 5% on Thursday and over 10% on Friday.
Ives still has a favorable opinion on Tesla, maintaining an "overweight" recommendation. He believes that despite continuing protests outside Tesla showrooms and slumping global sales, it's vital for Tesla's future that Musk distanciate himself from the Trump administration before it's too late to salvage the Tesla brand.
Investors seem to concur. Even after Tesla posted its highest drop in quarterly sales in company history on a Wednesday report, shares closed higher the same day, following news that Musk was preparing to step back from his role in the near term. However, subsequent denials from the White House and Musk regarding Musk's potential departure may have negatively impacted Tesla stock.
Another stressor for Tesla shares is the rising fear of a recession, linked to the Trump administration's tariff policies - despite Tesla being less exposed to these tariffs compared to other automakers.
Riding the Post-Election Rollercoaster
Before the beginning of the year, Tesla shares nearly doubled in value between Election Day and a peak on December 17, as many investors believed Musk's closeness to Trump would benefit the brand. However, since that point, as it became clear that Musk would play a significant role in some of the administration's more contentious moves, they have lost almost all those gains.
Members of the administration have taken extraordinary measures to assist Musk. Trump announced he would purchase a Tesla himself and hosted a White House event to promote the cars. On March 19, Commerce Secretary and former Wall Street executive Howard Lutnick suggested buying Tesla on Fox News, claiming the stock "will never be this cheap again."
Experts argued that these comments may have violated government ethics rules. As it stands, Tesla shares are currently below that point.
Global Opposition: A Serious Issue for Tesla
Ives wrote in his Sunday report that while he still sees an upside for Tesla shares in the long-term, Musk's political role has caused significant reputational damage in the short-term.
This backlash isn't limited to America but also affects European and Chinese markets. China is the world's largest market for electric vehicles, surpassing the United States, and it's also Tesla's second-largest market with nearly $21 billion in 2024 sales. Ives warned that Trump's tariff policies in China and Musk's association will be difficult to overestimate, driving Chinese consumers to favor domestic brands. He estimates the company has lost 10% of its future global customer base, which he said could be an underestimation.
Tesla has now become a symbol of global political contention, which Ives described as a very negative factor for the brand's future prospects.
While Ives, along with analysts at Deutsche Bank, Stifel Nicolas, Piper Sandler, and RBC Capital Markets still have a buy recommendation on Tesla despite their short-term apprehensions, there are prominent Wall Street analysts who advise investors to sell their Tesla shares. Both JPMorgan Chase and Wells Fargo analysts predict that Tesla stock will shed over 40% of its value from its current closing price over the course of the next year.
In a Friday note to clients, JPMorgan Chase analyst Ryan Brinkman wrote, "What seems clear is that the trend in Tesla sales is worse than we and the market had believed." As it stands, Tesla's shared aim is to recover standing and restore confidence in the brand.
- In the wake of Elon Musk's public support for President Trump, securities analysts like Dan Ives of Wedbush Securities are revising their 12-month price targets for Tesla, which targets the overall health of the business.
- The early alliance between Tesla and the Trump administration, once seen as beneficial for the brand, has now become a source of troubles for Tesla's securities, with analysts like JPMorgan Chase's Ryan Brinkman predicting a 40% decrease in Tesla stock.
- As global opposition to Musk's political role grows, affecting markets in America, Europe, and China, Tesla's image is taking a hit, particularly in the Chinese market, one of the company's largest targets, where the company is estimated to have lost a significant portion of its future customer base.
