Tesla, a major player in the electric car surge and one of the most talked-about companies over the past decade is facing some severe challenges. To put it frankly, it's been one setback after another for Tesla (NASDAQ:TSLA). The demand for electric vehicles (EVs) is on the decline, the company is battling fierce competition from other brands, especially in China. Recently, it got bumped from the S&P 500's top tier, with its shares taking a 31% nosedive this year, making its CEO the world’s biggest loser in terms of net worth. And just when you thought it couldn't get any worse, this week brought another hurdle.
On Wednesday, Wells Fargo raised concerns about the diminishing impact of Tesla's price cuts, the world’s once most valuable automaker, on demand for its electric vehicles and downgraded them to "underweight." This move led to a 2% drop in Tesla stock price.
The brokerage released a scathing report, forecasting a worst-case scenario of $44 a share, which is roughly 75% lower than the current market price of $169 per share. According to the report, this grim price target could become a reality within the next 12 months. Additionally, Wells Fargo slashed Tesla's price target to $120 from $200, making it one of the lowest on Wall Street.
Tesla's stock has plummeted by more than 30% this year. Its lackluster performance threatens to cast it out of the Magnificent Seven club, lagging behind other heavy hitters such as Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ-GOOG), and Meta (NASDAQ:META) in 2024.
Despite its struggles, Tesla still boasts the highest forward price-to-earnings ratio of 52 among the seven companies, as analysts lowered their estimates for earnings. On average, analysts have reduced their earnings forecast for 2024 by approximately 10.8% in the past 30 days, according to LSEG data. Nevertheless, the average Wall Street rating for Tesla remains "hold," as many analysts anticipate the demand slump to stabilize later this year.
