Tesla’s Stock Downgraded to Underweight by Wells Fargo Analyst
Tesla’s stock has taken a hit after a downgrade from Wells Fargo analyst Collin Langan, who has lowered the automaker’s stock from Equal Weight to Underweight. He believes that the company is a “growth company with no growth,” and he is concerned about the automaker’s recently reduced prices. According to Langan, cutting prices to boost sales is not working as sales only increased by 3% in the latter half of 2023 even though prices were cut by 5%.
Tesla’s Growth Prospects
Tesla itself warned about the potential deceleration in growth prospects and analysts agreed that the company’s growth could slow down as much as 20% this year. However, some analysts, such as Dan Ives from Wedbush, argue that Tesla is still a long-term play. They suggest that investors look to 2025 or 2026 for the return of growth. Despite the uncertainty around Tesla’s growth, Langan’s downgrade was surprising given that he has been tepid on the stock for a while.
Tesla’s Bad News
Though Tesla’s recent production restart in Berlin is encouraging news, it is more like the removal of bad news rather than a significant development. Tesla halted production due to protests and potential vandalism of a power substation nearby. The reopening of the factory brings the company back to its previous production capacity.
Tesla’s Market Cap Falls
Another noteworthy event is that Tesla’s market cap has fallen below JP Morgan’s market cap. This indicates that the company’s sentiment has hit a nadir, and analysts are increasingly pessimistic about the firm’s prospects. The stock is still comparatively highly valued, but investors must be prepared for either a slowdown in growth or a long-term turnaround.
Investing in Tesla
Investors who are betting on Tesla’s long-term growth will need to be patient, and those who want more immediate returns will need to look elsewhere. The longer-term bet on Tesla is that it is free of the legacy costs that current automakers face as they transition to electric vehicles. However, the current uncertainty around the sector means that investors must be careful.
Hot Take
Analysts have mixed views about Tesla’s growth prospects. While some, including Dan Ives from Wedbush, believe that the company is a long-term play, others like Collin Langan from Wells Fargo think that the company is a “growth company with no growth.” Analysts warn that investors must be prepared for either a slowdown or a long-term turnaround in the company’s fortunes.
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