As Tesla's losses continue to mount, more Wall Street names are turning bearish on the electric vehicle maker. UBS and Redburn Atlantic have reiterated their sell ratings on Tesla, citing sluggish Model Y delivery forecasts and a lack of immediate growth catalysts. UBS has cut its price target by $24 to $225, signaling a potential 14% downside, while Redburn's more pessimistic $160 target suggests a possible decline of over 39%.
Analyst Adrian Yanoshik from Redburn expressed concerns about stalled volumes, weak demand signals, and potential cash flow strains due to increased inventories for the refreshed Model Y deliveries. The looming threat of U.S. tariffs on imports from Mexico also adds to the company's challenges.
Concerns Over Model Y Deliveries and Growth Catalysts
UBS has cut its price target on Tesla by $24 to $225, indicating a potential 14% decline in the stock, while Redburn has set a more pessimistic target of $160, suggesting a possible 39% drop. Analysts point to sluggish Model Y delivery projections and a lack of immediate growth drivers as reasons for their bearish outlook.
Despite Tesla's strong performance in recent years, UBS and Redburn Atlantic believe that the stock may be overvalued and could face challenges in the future. Investors will be closely watching Tesla's upcoming delivery report and financial results to gauge the company's performance and outlook.
Challenges Ahead for Tesla
Redburn's Adrian Yanoshik anticipates a challenging year for Tesla with stagnant sales and cash flow issues due to high inventory levels. The looming threat of U.S. tariffs on Mexican imports further complicates the company's financial outlook.
Tesla's shares fell nearly 9% on Monday, extending its year-to-date decline to over 40%. If the current trends persist, the stock could be on track for an eighth consecutive week of losses, marking its longest losing streak in 15 years. Several other firms have also revised their price targets for Tesla downward, reflecting the growing skepticism in the market.
Stock Performance and Market Sentiment
Tesla shares plummeted by nearly 9% in a single day, contributing to a year-to-date decline of over 40%. Analysts warn that if current trends persist, the stock could experience its eighth consecutive week of losses, marking its longest downward trend since becoming a publicly traded entity 15 years ago.
The company is facing tough competition in China's autonomous car market, declining vehicle sales in the U.S. and Europe, and criticism over CEO Elon Musk's political activities. These challenges have cast doubt on Tesla's bull case, which has been built on the vision of becoming more than just an automaker.
Growing Skepticism Among Financial Institutions
Recent weeks have seen a wave of downgrades in Tesla's price targets from prominent firms like Bank of America, Baird, and Goldman Sachs, reflecting a broader shift in sentiment towards the company's future prospects.
Despite ongoing developments in artificial intelligence-powered technologies like robotaxis and humanoid robots, analysts believe these opportunities are still distant realities. UBS analyst Joseph Spak remarked that Tesla's stock is currently overvalued and trading at a level that does not justify the company's long-term potential.
Challenges in the Global Market
Tesla is grappling with increased competition from self-driving car manufacturers in China, weakening vehicle sales in the U.S. and Europe, and controversies surrounding CEO Elon Musk's political involvements. These factors have cast doubt on Tesla's ambitious vision beyond traditional automotive manufacturing.
Looking ahead, Spak lowered his 2025 delivery forecast to reflect softer demand for Tesla's key models and warned of pricing pressures that could impact the company's margins. He also noted that Tesla's plans for a "lower-cost" vehicle might pose additional margin challenges.
Long-Term Concerns and Market Valuation
Analysts caution that Tesla's aspirations for AI-powered robotaxis and humanoid robots remain distant goals, and the stock's current valuation may already account for these futuristic ventures. UBS's Joseph Spak notes that Tesla's premium valuation is unjustified given the softer demand outlook for its existing models and potential pricing pressures.
Of the 54 analyst ratings on Tesla, only three suggest selling the stock, while nine advise underperforming and 16 have hold ratings. On the other hand, twenty-six analysts maintain either a buy or a strong buy rating on the company.
UBS and Redburn Atlantic have both reiterated their sell ratings on Tesla as the electric vehicle manufacturer continues to face mounting losses.
Analyst Ratings and Investor Perception
Out of 54 analyst ratings on Tesla, only three advise selling the stock, while nine suggest underperforming and 16 recommend holding. Despite the growing skepticism, 26 analysts maintain buy or strong buy ratings, underscoring the divided opinions on Tesla's future trajectory.
