Tesla’s Stock Faces Uncertainty Amid EV Slowdown and Political Ties
Tesla (TSLA) continues to be one of the most actively traded stocks, but the electric vehicle giant is navigating a challenging landscape. Slowing EV demand, increasing price competition, and potential tariff risks have raised concerns among investors. However, Tesla bulls remain optimistic about the company’s broader ambitions beyond vehicles, particularly in robotics, artificial intelligence, and autonomous driving. A recent factor influencing Tesla’s market perception is CEO Elon Musk’s association with former President Donald Trump, which some investors see as a political advantage.
Mixed Analyst Sentiment on Tesla’s Future
Despite investor enthusiasm, Wall Street analysts are divided on Tesla’s outlook. Guggenheim analysts maintain a bearish stance, reiterating a $175 price target—suggesting a notable downside from current levels.
A key area of debate is Tesla’s Full Self-Driving (FSD) software. While the company has found ways to monetize this high-margin technology, concerns linger about its long-term profitability, especially in competitive regions like China. Analysts warn that Tesla’s planned FSD expansion in China may highlight vulnerabilities in its autonomous driving efforts, which could lead to reduced profit margins in line with traditional automakers.
Tesla’s financial data further underscores these concerns. Although revenue grew slightly year-over-year (rising from $25.17 billion to $25.71 billion last quarter), gross profit has declined by approximately 5.8%. The company’s gross margin has dropped to 16.25% from 17.6% a year ago, reflecting increased cost pressures. Analysts caution that challenges in pricing FSD competitively in China, along with regulatory hurdles related to data and computing requirements, could create additional headwinds for Tesla’s stock.
Diverging Views on Tesla’s Valuation
Guggenheim is not alone in its cautious stance. Out of 40 analysts covering Tesla, 10 have issued “Strong Sell” ratings. While the stock’s average price target sits at $348.61 per share, estimates vary widely from $120 to $550—indicating significant volatility in the months ahead. Guggenheim’s $175 target suggests over 30% downside potential.
Tesla’s brand perception has also been a subject of debate. Musk’s political connections have drawn both support and skepticism, with some viewing his ties to Trump as beneficial, while others worry about potential backlash among consumers.
Can Tesla Maintain Its Market Leadership?
Beyond FSD concerns, broader challenges such as slowing sales growth, shrinking profit margins, and competitive pressures in the global EV industry have left investors questioning Tesla’s ability to maintain its valuation premium. The company maintains a strong balance sheet, with more cash than debt and a current ratio above 2x. However, with sales momentum slowing, Tesla faces increasing scrutiny over its future profitability.
Additionally, the fading of the so-called “Trump trade,” which helped fuel Tesla’s stock gains in late 2024, could add to downside risks. With evolving macroeconomic and political conditions, Tesla’s near-term trajectory remains uncertain, making it a highly watched stock in the market.
