Some analysts are expressing caution about investing in Tesla Inc (TSLA) shares, despite the company’s recent drop in value. Mark Newton, head of technical strategy at Fundstrat, believes that the stock has not yet reached its bottom and may experience another downward move in the near future.
What’s Driving the Caution?
Newton predicts that the stock could tumble 12% below current levels, citing a potential move down within the next one or two weeks. This comes after Tesla’s record close on December 17, which was followed by a significant decline in value.
Background
Tesla’s stock initially rose after the Presidential elections in November, driven by investor expectations of favorable regulations due to CEO Elon Musk’s proximity to the President. However, since reaching a high of $479.86 on December 17, the stock has not closed at that level again.
Concerns About EV Demand
Musk did not reiterate his 20-30% growth in delivery outlook for 2025 during the company’s fourth-quarter earnings call, fueling concerns about EV demand in Europe, China, and California. Additionally, the launch of robotaxis for ride-hailing in Austin, scheduled for June, may not provide significant momentum for the stock until then.
Analyst Insights
According to Evercore ISIS analyst Chris McNally, the lack of significant developments on the autonomous vehicle front until June may contribute to the stock’s stagnation. Steve Sosnick, chief strategist at Interactive Brokers, notes that the shares already have “an awful lot of growth” priced in, making them vulnerable to disappointment or a loss of faith in the company’s growth prospects.
Bullish Outlook
In contrast, Tesla bull Dan Ives sees several positive catalysts for the stock, including:
- The release of new, more affordable vehicles in the first half of the year
- The launch of unsupervised vehicles in Austin in June
- Ongoing developments in autonomous technologyypedefs/Optimus across the company’s global ecosystem
Ives believes that these factors will drive growth and momentum for the stock.
Current Price Action
Tesla shares closed up 5.8% at $355.94 on Thursday and are currently up 1% in premarket trading. Despite being down 6.2% year-to-date, the stock has gained 88.6% over the past year.
Analyst Ratings
Tesla has a consensus “buy” rating based on the ratings of 31 analysts, with a average price target of $324.62. The three most recent analyst ratings were released by Benchmark, GLJ Research, and Stifel.