tesla stock target trimmed, but analyst still says 'buy'

2025-03-21 general

New York, Friday, 21 March 2025.
a leading analyst just cut tesla’s stock target to $410, a $20 reduction. this adjustment comes despite maintaining a ‘buy’ rating. the decision reflects concerns about weaker delivery projections for tesla vehicles. sales volume and revenue growth could face headwinds. the analyst is still positive on tesla’s long-term potential. falling sales estimates triggered this revision. investors are watching closely to see if tesla can overcome these challenges.

Analyst action and market reaction

A top analyst has decreased the price target for Tesla shares from $430 to $410, a -20 dollar reduction, while still recommending a buy [1]. This adjustment is due to anticipated lower delivery numbers for Tesla vehicles [1]. Investors are concerned about potential challenges in sales volume and revenue growth [1]. The analyst’s continued positive long-term outlook contrasts with these near-term performance concerns [1]. This target price reduction reflects worries about Tesla’s capacity to meet previous sales expectations [1]. Market watchers are assessing the implications of this revised target for Tesla’s stock performance.

tesla’s stock performance

Tesla’s shareholders have experienced significant losses this year [4]. The stock has plummeted 43% and is down 54% from its 52-week high of $488.54 [4]. Some attribute this downturn to Elon Musk’s public statements and activities, which may alienate some customers [4]. Investors are questioning whether Musk remains an asset or has become a liability for the company [4]. Concerns extend beyond his political views to his capacity to effectively lead Tesla and generate shareholder value [4]. One perceived misstep is underestimating the growing competition from electric vehicle manufacturers like BYD [4].

Tesla faces significant sales declines in key markets [3]. January sales in Europe fell by over 45%, with Germany experiencing a 71% drop in the first two months of the year [3]. This decline may be linked to Musk’s support for a far-right German party, causing potential buyers to hesitate [3]. In China, tesla’s february wholesale sales decreased by 51.5% compared to january and 49.2% year-over-year, reaching the lowest monthly level since july 2022 [3]. Kelley Blue Book estimates tesla’s february u.s. sales at 43,650 vehicles, one of the lowest months in nearly three years [3].

factors impacting sales

Several factors contribute to Tesla’s sales challenges [3][4]. Some believe the global electric vehicle sales growth is slowing [3]. Reduced government subsidies and consumer hesitation due to high prices and limited charging infrastructure play a role [3]. However, global sales of fully electric and plug-in hybrid vehicles increased by 24% last year, reaching a record 17.2 million units [3]. While Tesla’s January European sales fell by 45%, overall electric vehicle sales in Europe rose by over 37% in January, suggesting Tesla’s issues extend beyond general market conditions [3].

challenges to tesla’s dominance

Tesla’s limited model lineup, primarily consisting of the Model 3 and Model Y, contrasts with competitors like BYD that offer a wider range of vehicles, many priced lower than Tesla’s [3]. Increased competition from new entrants like Xiaomi also threatens Tesla’s market position [3]. Furthermore, Musk’s association with Trump and the republican party is negatively impacting Tesla’s sales [3]. Sales are declining in California, a democratic stronghold [3]. Protests against tesla are spreading across the u.s., aiming to stigmatize the brand due to musk’s political activities [3].

analyst perspectives on tesla’s value

Despite recent challenges, some analysts believe Tesla presents a buying opportunity [4]. One analysis suggests a potential 31% upside, with a target price of $296.53, based on median EV/EBITDA [4]. The stock is considered attractive at its current price due to a 16% annual EBITDA growth rate and a 55% annual free cash flow growth rate [4]. However, analysts emphasize the need for Tesla to effectively compete and innovate without relying on electric vehicle incentives, which are diminishing [4]. Failure to do so could lead to a permanent decline in its EV/EBITDA multiple [4].

investor concerns and potential recovery

Investors are increasingly worried about Musk’s extensive involvement in the Trump administration and his focus on right-wing politics, which may alienate buyers [7]. Since the start of Trump’s second term, Tesla’s stock has dropped by 47%, significantly more than the S&P 500’s 7% decline [7]. Ross Gerber, an early Tesla investor, suggests that Tesla needs a new CEO or for Musk to dedicate his full attention back to the company [6]. Gerber believes Tesla’s reputation is being damaged by Musk, leading to declining sales [6].

actions to boost sales

Tesla is taking steps to revitalize sales, including launching a redesigned Model Y and planning to produce cheaper models later this year [3]. Musk is also focusing on autonomous vehicles and robotics, with plans to begin production of a self-driving Cybercab in 2026 and deliveries of the Optimus humanoid robot starting next year [3]. Wedbush analyst Dan Ives, while maintaining an ‘outperform’ rating on Tesla, acknowledges that investor patience is waning [5]. He emphasizes that Musk needs to deliver on promises of lower-priced vehicles and introduce new services like robotaxis to demonstrate innovation [5].

Bronnen

Stock Target Sales Projections