Tesla is the worst performing stock in the S&P 500. Analysts say it has further to fall

Tesla Leads S&P 500 Declines, Analysts Predict Further Downturn

In New York, according to CNN, Tesla, once seen as the beacon of the future in car manufacturing, now faces uncertainty about its own destiny. The company, once celebrated as a key player among the elite tech giants known as the Magnificent Seven, is currently trailing behind as the S&P 500’s least successful entity this year, experiencing a near 32% drop since January.

Tesla’s journey, marked by a decline, has been extensively covered. Challenges such as safety concerns, product recalls, decelerating growth, and the need to reduce prices have plagued the company. A recent analysis by Wells Fargo’s Colin Langan paints an even grimmer scenario than previously thought.

Langan describes Tesla as a “growth company with no growth.” He anticipates that Tesla’s expansion will hit a standstill this year and potentially decrease in 2025. This prediction comes in light of rising competition, disappointing delivery numbers, and the possibility of further price reductions.

On the same day, UBS also revised its outlook for Tesla downwards. The firm highlighted growing apprehensions as the demand for electric vehicles wanes and Chinese competitors capture a larger portion of the market.

While Tesla struggled, the rest of the Magnificent Seven, including giants like Apple, Amazon, Meta, Google, Nvidia, and Microsoft, reported significant earnings growth in the last quarter of 2023. In stark contrast, Tesla saw its profits tumble by 40% from the previous year.

Tesla is currently navigating through a tumultuous phase. The electric vehicle market is becoming increasingly saturated just as the company’s core strengths are being questioned. Its stock has plummeted roughly 60% from its peak in 2021.

Despite the recent downturn, Tesla’s stock remains pricey relative to its earnings and profits, Langan points out. The expectation for swift growth that once buoyed the company’s stock is now fading, with predictions of further declines.

Wells Fargo has adjusted its stock price target for Tesla from $200 down to $125, foreseeing an additional 25% decrease in value. UBS, on the other hand, has set a slightly higher target, reducing its forecast from $225 to $165.