Wells Fargo Analysts Bearish on Tesla Stock Despite Recent Rally
In a recent report, Wells Fargo analysts maintained their negative stance on Tesla (NASDAQ:) stock, reiterating an Underweight rating and a price target of $120, suggesting a potential drop of over 50% from current levels. Despite a 40% surge in Tesla stock over the past month, driven by flashy headlines, analysts believe that the fundamentals of the company remain weak.
The recent rally in Tesla stock has been attributed to various positive developments, such as beating Q2 delivery estimates, Elon Musk's $56 billion pay package approval, Full Self-Driving (FSD) testing in China, the deployment of Optimus, and excitement surrounding the robotaxi concept. However, analysts suspect that technical factors may have amplified the upward movement in the stock price.
While Tesla's Energy sector shows promise with record energy storage deployments in Q2, analysts caution that this business can be volatile due to its project-based nature. Additionally, concerns have been raised about the impact of new tariffs in the US and EU, which could add significant costs to Tesla's operations in the coming years.
In light of these factors, Wells Fargo analysts have adjusted their earnings estimates for Tesla, reflecting both positive and negative influences on the company's financial outlook. It is important for investors to consider these factors when making decisions about their investment in Tesla stock.
Analysis:
Wells Fargo analysts are skeptical about Tesla's stock performance despite recent positive developments. They believe that the stock's rally may be short-lived due to weak fundamentals and potential risks from new tariffs. Investors should be cautious and consider the potential downside before investing in Tesla stock.