BusinessTesla Stock Plummets 4.5% Following Wells Fargo Downgrade: What's Next for TSLA

Tesla Stock Plummets 4.5% Following Wells Fargo Downgrade: What’s Next for TSLA

Wells Fargo slashes Tesla’s (TSLA) ⁢price target to $125, causing​ the stock ‍to drop below the $170 level on Wednesday. This downgrade comes⁣ as analysts ⁤express concerns about lower demand ​and growth‍ prospects for Elon Musk’s electric vehicle company. TSLA is now trading at its lowest ‍point since May 2023,⁣ with technical ⁤support expected in ⁤the $150s⁣ and $160s.

The broader market also saw some fluctuations, with ⁣the ‌NASDAQ and‍ S&P 500 experiencing slight​ declines while the⁢ Dow ⁢Jones Industrial​ Average managed ‌to gain some ground amidst rising Treasury yields.

Tesla‌ stock update: Wells Fargo bearish on TSLA

Wells Fargo analyst Colin Langan ⁤has given Tesla stock ⁢a sell rating due to perceived overvaluation compared to other tech giants.‍ Langan⁤ highlighted Tesla’s ‌high price-to-earnings ratio of 58x versus the‍ industry average of 31x among the so-called ⁣Magnificent 7 stocks.

Despite the recent⁢ downward ‍trend in Tesla stock‌ price, with a 43% drop from its peak⁣ in ⁤July 2023 and a 59% decline from its‌ all-time high in‍ November 2021, some firms like Deutsche⁢ Bank and Morgan ⁣Stanley still ​maintain buy ratings on ⁣TSLA. However, Wells Fargo remains‌ cautious, particularly about ⁢the⁢ company’s profit outlook over the medium term.

In addition to concerns about profitability,‍ Langan predicts negative earnings per share revisions in the ⁤future due to ongoing price cuts and‍ disappointing delivery numbers‍ for Tesla vehicles. This⁢ skepticism is shared​ by other ⁢analysts, with Morgan Stanley⁣ endorsing Ford as its top automotive pick for its profitability from internal combustion engine models.

Meanwhile, Swedish EV manufacturer Polestar reduced the price of its Polestar 3 model by 12% due to sluggish demand, reflecting‌ broader​ challenges⁣ in the ⁢electric vehicle market. Elon Musk’s visit to ⁢Tesla’s Berlin factory coincided with an attack on⁣ the ‌site’s electricity infrastructure by environmental activists.

Electric vehicles: a brief overview

Electric vehicles (EVs) utilize⁤ rechargeable batteries and electric motors for propulsion instead ‌of traditional internal combustion⁢ engines. While EV technology has⁤ been around for decades, advancements ⁣in lithium-ion battery technology in⁣ the late 20th​ and early 21st centuries have enabled mass production of⁣ EVs. This shift‌ towards electric propulsion marks ⁢a significant evolution in the automotive ⁣industry.

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