Tesla’s stock fell in March 2024 after American financial services giant Wells Fargo’s analysts noted that the electric car manufacturer is a “growth company with no growth” and that the stock “ain’t looking so Magnificent.”
Wells Fargo reduced its rating to underweight from equal weight and lowered its price target to USD 125 from USD 200, causing the electric vehicle maker, a member of the infamous Magnificent 7 group of tech stocks, to trade at its lowest price in ten months. Tesla’s stock, which has lost almost one-third of its value since the year’s beginning, was down 3.2% at USD 171.92.
The downgrade coincides with increased competition and a cooling of the electric vehicle market overall, which prompted Tesla to announce a number of price reductions in an effort to increase demand. Wells Fargo analysts led by Colin Langan noted in a note that those price reductions are driving down profits while having little impact on Tesla’s sales.
According to Wells Fargo, Tesla trades at a premium compared to its Magnificent 7 competitors, despite the likelihood that its sales volume will decline in 2025 and likely remain flat in 2024. The bank stated that its projections for Tesla’s 2024 and 2025 earnings are currently 32% and 52%, respectively, less than the consensus of Wall Street.
Not Everyone Is Sour On Tesla
However, not everyone thinks poorly of Tesla. Dan Ives of Wedbush feels that there is too much negativity towards the company and its CEO, Elon Musk.
“The Tesla narrative is as negative as we have seen in the last few years with Musk and Tesla getting attacked by the bears from all directions. We have been here before with Musk/Tesla a number of times over the last decade as the doubters have said the Tesla story is done and electric vehicles are a fad, not a long term transformational trend that will change the auto industry,” Ives said in a note, reported by the Investopedia.
Ives acknowledged that the Chinese electric vehicle price wars are “brutal,” but he also mentioned that there is a feeling that the frenzy is beginning to fade, which is excellent news for the sector as a whole.
Wedbush stated that even though the first quarter is “tracking softly towards the 430k level,” the company should deliver more than two million units in 2024.
Talking about the electric vehicle price war, Tesla will increase prices for all Model Y cars in the United States by USD 1,000 from April 2024.
The company on March 2024 had also raised the prices of its Model Y rear-wheel drive and long-range vehicles by USD 1,000 to USD 43,990 and USD 48,990, respectively.
The automaker had temporarily cut prices of some of its Model Y cars in the United States in February 2024, nearly a month after it slashed prices across Europe and China.
“This is the essential quandary of manufacturing: factories need continuous production for efficiency, but consumer demand is seasonal,” CEO Elon Musk said in February.
Model Y will see a price rise in Europe too, approximately by 2,000 euros (USD 2,177), or the equivalent in local currencies.
Tesla’s margins have been hurt by a price war with rivals that started more than a year ago. In January 2024, the Elon Musk-led venture warned of “notably lower” sales growth this year as it focuses on the production of its next-generation electric vehicle, code-named “Redwood.”