Wells Fargo reiterated its "Underweight" rating on Tesla (TSLA, Financial) shares in a Friday note, lowering its price target to $130 from $135. The bank cited weak fundamentals, slowing sales, and margin pressures as key risks. Despite a 40% year-to-date drop, Wells Fargo warns of over 40% potential downside if earnings estimates continue to decline.
Tesla's sales are contracting across regions. European sales declined 45% in January and 41% in February, while U.S. sales fell 11% in January and China's sales dropped 14% year-to-date. The bank also reduced its Q1 2025 delivery estimate to 360,000 units, a 27% quarter-over-quarter and 7% year-over-year decline.
Although a refreshed Model Y and a new Model “2.5” launch in Q2 could spark recovery, ongoing price cuts, fierce competition in China, and concerns over the upcoming CyberCab launch in Austin add to the uncertainty.
The combination of these factors creates an ambiguous path for Tesla's future recovery that makes investors unsure about short-term prospects.
