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Wall Street\u2019s stance on Tesla Inc. worsened further on Wednesday as yet another analyst warned about risks to sales, and said its strategy of cutting prices to boost demand was losing its effectiveness.<\/p>\n
The electric vehicle maker\u2019s growth in its core markets has moderated, Wells Fargo analyst Colin Langan wrote in a note to clients Wednesday, as he downgraded the stock to the equivalent of a sell rating. Langan expects Tesla\u2019s sales volumes to be flat this year and to fall in 2025.\u00a0<\/p>\n
Elon Musk\u2019s company is a \u201cgrowth company with no growth,\u201d Langan wrote. He highlighted that sales volumes rose only 3% in the second half of 2023 from the first half, while prices fell 5%.<\/p>\n
Tesla analysts are getting increasingly wary, and the share of bullish ratings on the stock has dropped to the lowest since April 2021. Sentiment deteriorated after the company in January said its growth will be\u00a0\u201cnotably lower\u201d<\/a>\u00a0this year, while other automakers, EV suppliers and even rental-car companies have sounded similarly cautious comments about the near-term demand for EVs.<\/p>\n As a pure-play EV company with an eye-wateringly high valuation, Tesla shares have taken a serious hit. The stock has already fallen 29% this year through Tuesday\u2019s close, placing it among the worst performers on the S&P 500 Index. The Austin-based company fell as much as 2.8% by 9:32 a.m. in New York.<\/p>\n This year\u2019s selloff has wiped more than $224 billion from the company\u2019s market value through its last close, and pushed it off the list of the 10 biggest companies on the S&P 500.\u00a0<\/p>\n Even after the decline, the stock still trades at 55 times its forward earnings, compared to the average of about 31 for the Bloomberg Magnificent 7 Price Return Index.\u00a0<\/p>\n \u201cWhile an EV and battery technology leader, Tesla screens poorly relative to Mag 7 peers,\u201d Wells Fargo\u2019s Langan said, noting the valuation discrepancy. The analyst lowered his 2024 profit estimate for the company to $2 a share from $2.40. That compares to analysts\u2019 average expectation of $3.03 a share for the year, according to data compiled by Bloomberg.<\/p>\n Still, some analysts see a bright future for the company, and the drop in shares reflect an overly bearish outlook.<\/p>\n \u201cThe demand story for EVs globally has clearly moderated, however we believe Tesla is on the broader trajectory to see growth and margin improvement return to the story over the coming quarters,\u201d Wedbush analyst Dan Ives wrote in a note Wednesday. \u201cNow is not the time to throw in the towel on Tesla.\u201d\u00a0<\/p>\n<\/div>\nSubscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n<\/div>\n