TLDR
- Tesla stock fell 15% on Monday, wiping out post-election gains and putting it down 41% year-to-date
- UBS analyst Joseph Spak reiterated a Sell rating, cutting his price target from $259 to $225
- President Trump defended Elon Musk and said he’s buying a Tesla amid concerns over Musk’s political distractions
- Tesla shares rose 2.9% in premarket trading Tuesday following the selloff
- Analyst opinions remain divided, with bulls like Dan Ives seeing AI and self-driving technology as future growth drivers
Tesla stock experienced a dramatic 15% decline on Monday, erasing recent gains and intensifying investor concerns about CEO Elon Musk’s divided attention. The steep drop pushed the electric vehicle maker’s shares down 41% since the beginning of the year.
The selloff came after UBS analyst Joseph Spak maintained his Sell rating on Tesla shares. He also reduced his price target from $259 to $225.
Spak cited lower delivery forecasts stemming from weaker demand for the company’s Model 3 and Model Y vehicles. His full-year delivery estimate stands at 1.7 million vehicles, significantly below Wall Street’s expectation of 2 million.
This bearish outlook, combined with troubling news from China, contributed to Monday’s sharp decline. Tesla shipments in China reportedly fell to their lowest level in almost three years.
The stock’s closing record of $479 on December 17 has now been cut in half. Investors are increasingly concerned about Musk’s numerous commitments outside of Tesla.
Along with running the electric vehicle company, Musk directs the newly created Department of Government Efficiency (DOGE) for the Trump administration. He also leads X (Twitter), xAI, SpaceX, The Boring Company, and Neuralink.
In an interview with Fox Business’ Larry Kudlow on Monday, Musk acknowledged running his businesses “with great difficulty.” He added that he would likely spend another year in Washington, D.C., on DOGE business.
Despite the concerning market reaction, Tesla saw a modest recovery in premarket trading on Tuesday. Shares rose 2.9% to $228.55 following President Trump’s public support.
Trump announced he was buying a Tesla
In an early morning post on Truth Social, Trump announced he was buying a Tesla. He defended Musk against what he called “The Radical Left Lunatics” trying to “illegally and collusively boycott Tesla.”
Trump wrote: “Why should [Musk] be punished for putting his tremendous skills to work in order to help MAKE AMERICA GREAT AGAIN???”
Market analysts remain divided on Tesla’s future. Frank Cappelleri, founder of CappThesis and a market technician, noted that traditional technical indicators haven’t been reliable for Tesla recently.
“With every trendline, retracement level, former high or low and moving average being sliced through, the stock is in pure support discovery mode now,” Cappelleri said. He added that investors are looking for a bottom after the recent declines.
Cappelleri cautiously stated: “At some point a new reference point will be established. I’d rather miss the low rather than try to guess where the stock will stop falling.”
Some analysts remain optimistic
Other analysts maintain a more optimistic view. Wedbush’s Dan Ives, a long-time Tesla bull, reaffirmed his Buy rating and $550 price target in a Monday report.
Ives acknowledged the current situation isn’t “pleasant” for Tesla bulls and that “Musk DOGE distractions/brand issues have taken on a life of their own.” However, he remains convinced that Tesla is a “transformation growth story.”
According to Ives, Tesla’s future depends on more than just vehicle sales. He believes AI and self-driving technology will “unlock trillions in value” for the company.
“This is the start of the biggest innovation and technology cycle in Tesla’s history ahead over the next few years,” Ives wrote, maintaining his long-term bullish perspective despite short-term turbulence.
The stock’s recent volatility highlights the ongoing debate about Tesla’s true identity. Is it primarily an automotive company facing increased competition and demand challenges? Or is it an AI and robotics company with massive untapped potential?
For Tesla bulls, the current slump represents just another opportunity for a comeback. For bears, it confirms their skepticism about the company’s lofty valuation against real-world sales challenges.
As Tesla adapts its business model and navigates complex political landscapes both in the US and abroad, investors continue to watch closely for signs of which direction the volatile stock might head next.
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