On Wall Street, Support for Tesla is Beginning to Wane; Tesla Stock Falls Following Yet Another Downgrade

Tesla Stock


A few days ago, Tesla stock (NASDAQ:TSLA) was nearly as popular with Wall Street investors as it has ever been. The analysts are now less confident. 

Hold is a lower recommendation than Buy that was issued by analyst Rod Lache of Wolfe Research on Monday regarding shares of Tesla (NASDAQ:TSLA). At this point, he does not have a price target in mind for Tesla stock. His previous price target for the stock was $185. 

Lache is becoming slightly more concerned about the deteriorating state of the macroeconomy, which may have an effect on the number of automobiles sold. According to Chris Senyek, the Chief Investment Strategist at Wolfe Research, there has been an increase in the number of delinquencies on auto loans, which may indicate that consumers in the United States will spend less in the future. 

The downgrade is putting a little bit of pressure on share prices to start the week. In premarket trading, Tesla stock is currently valued at $172.54, which is a decrease of approximately 0.5%. S&P futures are flat. Nasdaq Composite futures are up 0.5%. 

It’s the second time in the last few days that our rating has been lowered. Tuesday evening, an analyst from Berenberg named Adrian Yanoshik lowered his recommendation for Tesla shares, moving them from Buy to Hold. However, he increased his price target, moving it up from $200 to $210 per share. 

After Tesla shares overreacted to price cuts at the beginning of the year, Yanoshik downgraded the company’s stock so that he could take some profits and adjust the valuation. 

On January 6, Tesla announced price cuts in China, which caused the stock price of Tesla to rise to $101.81. Tesla has reduced prices multiple times this year in an effort to increase customer demand and make more of its models eligible for recently introduced tax credits in the United States. 

After the initial shock of Tesla’s price cuts in early 2023 wore off, investors began to believe that the company’s cost leadership and strength were reflected in the company’s decision to implement the price cuts. Since its low point on January 6, Tesla stock had gained 70 percent going into trading on Monday. 

According to FactSet, despite the downgrades, 53% of the analysts covering the company recommend purchasing the company’s shares. About 58% of the stocks in the S&P 500 are rated as Buy by market analysts on average. The current consensus among market analysts places a price target of approximately $198 per share. 

Midway through the month of February, approximately 66 percent of analysts covering Tesla stock assigned a Buy rating to shares. Since 2012, when 67% of analysts covering the company rated share Buy, Tesla stock has been at that level of popularity with Wall Street. 

When I was a kid, things were very different. The price of a share of Tesla stock was around ten dollars, the company had a market capitalization of approximately three billion dollars, and ten analysts covered the stock. Tesla is now covered by over 40 analysts, and its market cap is approximately $540 billion, making it the most valuable automobile manufacturer on the entire planet. 

As Tesla shares approached $200, a level that represents a gain of approximately 60% year to date and an increase of almost 100% from the 52-week low reached in January, the pace of downgrades picked up. 

Taking into account premarket activity, Tesla stock has gained approximately 40% since the beginning of the year. 

The Stock of Tesla at an All-Time High 

As of September 2021, Tesla’s stock price had been steadily climbing, having hit an all-time high of more than $900 per share in January of the previous year. However, the stock has also been subject to significant volatility, characterized by sharp fluctuations in response to recent news events, earnings reports, and general conditions in the market. 

Investors have been keeping a close eye on Tesla’s financial performance, with the growth of the company’s revenue and earnings attracting both bullish and bearish sentiment from the investment community. In addition, the ability of Tesla to carry out its ambitious expansion plans, which include the building of new factories and the introduction of new products, is likely going to be one of the most important factors in determining the stock’s future performance. 

The overall market value of Tesla stock is considered by many analysts to be a high-risk, high-reward investment. This is because the stock has a significant potential for growth, but it is also subject to a significant amount of volatility and uncertainty. Before settling on a decision, prospective Tesla investors need to carefully investigate the company’s financials, products, and growth plans, as well as think about how much risk they are willing to take and what they hope to achieve with their investments. 

Looking ahead, Tesla will release a report on deliveries for the first quarter at the beginning of April. In the first quarter of 2022, Wall Street anticipates sales of approximately 430,000 units, which is an increase from the 405,000 units sold in the previous quarter. This will be the next major catalyst for Tesla stock, and depending on how it plays out, shares could either go up or down.

Featured Image: Pixabay @ valentin_b90

Please See Disclaimer