Analyst resets Tesla stock price target tied to 'shocking' catalyst

Tesla shares edged higher in early Friday trading, but have lost nearly have of their value since mid-December, and a top Wall Street analyst suggests there could be more declines ahead tied to weakness in the group's core automaking business.  

Tesla  (TSLA)  is deep in the throes of one of its worst sales slumps on record, with European registrations plunging, China shipments in freefall and its U.S. brand under attack from 'Tesla Takedown' protests in major cities across the country. 

In a shift that belies the political connections between its CEO, Elon Musk, and President Donald Trump, Tesla is also facing increased risk to its business model from tariffs, according to an unsigned letter sent earlier this week by the company to the U.S. Trade Representative's Office.

"U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions," the letter read. "For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries." 

Wells Fargo analyst Colin Langan, who lowered his Tesla price target by $5, taking it to $130 per share in a note published Friday, said the "shocking" sales declines in Europe have "finally shifted focus" to the group's fundamentals. 

“The >40% year-to-date decline in Tesla's Europe sales was likely a key catalyst (for the stock's 2025 slump) as it raises the prospects of another year of no growth," Langan and his team wrote. 

Tesla's brand value slump

The analyst also lowered his estimate for first quarter deliveries to around 360,000 units, a tally that would mark a 7% decline from last year and a 27% slump for the three months ending in December.

Earlier this week, JPMorgan analyst Ryan Brinkman slashed his first quarter estimate for Tesla deliveries by 20%, taking it to 355,000, and forecast a second consecutive year of negative sales growth. 

"We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly," Brinkman said.

Related: Top analyst reworks Tesla stock price target amid global sales slump

Tesla's broad investor base, however, as well as the bullish analysts that cover the stock, argue that Tesla's legacy EV business, while key to its revenue generation today, isn't likely to drive the group's overall value in the coming years.

Musk's plans for a massive cybercab rollout next year, powered by his billions in AI investments, as well as the legion of Optimus robots he has said are already working in certain Tesla facilities, are considered far more important, in terms of market value, than its core automotive business.

Big swings common for Tesla stock

That could explain at least part of the stock's massive volatility, which has seen shares whipsawed through peak-to-trough moves of 40% on eight different occasions since 2018.

Garrett Nelson, vice president and senior equity analyst at CFRA, sees this most-recent Tesla slump as another buying opportunity.

"In our view, the shares are largely discounting expectations for near-term negative sales impacts, but we think Tesla  is well positioned to weather the consumer backlash with its $36 billion-plus of cash, industry-leading gross margins, and lesser exposure to tariffs relative to other automakers," he said. 

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"Potential near-term catalysts ahead include the launch of the robotaxi service in the Austin market and the U.S. Department of Transportation announcing a regulatory framework to help expedite the adoption of autonomous vehicles," Nelson added.

Langan at Wells Fargo, however, thinks this drawdown is different, and sees the risk of another 40% decline in Tesla shares from current levels as deliveries slow, margins are pressured and earnings estimates trimmed. 

"We’ve repeatedly flagged the weak core biz fundamental since our March ’24 downgrade," Langan said. "If fundamentals matter, the momentum likely turns negative as consensus estimates fall."

Tesla shares were last marked 1.7% higher in premarket trading to indicate an opening bell price of $244.75 each. 

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