Tesla Inc. shares experienced a significant decline of nearly 5% on Monday following Mizuho’s decision to lower its price target for the electric vehicle manufacturer. This move prompted economist Peter Schiff to question the market’s reaction, highlighting the disparity between the lowered target and the current stock price.
What Happened
Mizuho reduced its Tesla price target from $515 to $430, citing weakening demand as the primary reason. This change in forecast led to a drop in Tesla’s stock price, closing around $238. However, Schiff pointed out that the lowered price target is still 80% higher than the current closing price, sparking debate about the market’s response.
Market Analysis
Mizuho’s decision to lower the price target was based on reduced delivery forecasts, predicting 1.8 million vehicles to be delivered this year and 2.3 million in 2026. This is a decrease from the previous estimates of 2.3 million and 2.9 million, respectively. The analysts noted that Tesla significantly underperformed the market in the U.S., China, and Europe last month.
Challenges Facing Tesla
The automaker’s challenges are attributed to the deterioration in geopolitics and shifting brand perception. Tesla CEO Elon Musk’s involvement in the Department of Government Efficiency has sparked protests and reports of vandalism against Tesla vehicles and showrooms nationwide.
Investor Frustration
Wedbush Securities analyst Dan Ives recently highlighted investor frustration, stating that “Tesla investors are seeing patience wear thin as Musk is not reading the room.” This sentiment is echoed by longtime Tesla investor Ross Gerber, who shared footage of protesters outside a Tesla store in Santa Monica.
Stock Performance
Tesla shares have lost about half their value since their December peak of $479.86. The consensus price target is $318.22 from 30 analysts, ranging from $550 to $24.86. The latest ratings from Canaccord Genuity, Mizuho, and Wells Fargo average $321.33, implying a 36.1% upside.
Conclusion
The market’s reaction to Mizuho’s lowered price target has sparked debate, with some questioning the significance of the change. As Tesla continues to face challenges and investor frustration grows, the company’s stock performance will be closely watched in the coming months.
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