Tesla Stock Declines On Wells Fargo Rating

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Tesla Stock Declines On Wells Fargo Rating

Tesla Stock Declines On Wells Fargo Rating Downgrade

According to Wells Fargo, Tesla faces a 30% downside risk. In fact, Wells Fargo has also downgraded the Tesla stock rating to 'sell.' After these changes, Tesla's stock turned negative and lost 1.5% during Wednesday's trading session.

Earlier, Wells Fargo had assigned an equal-weight rating to the Tesla stock, which is now downgraded to sell. Additionally, the analysts commented that Tesla is a growing company but shows no growth.

Wells Fargo Cuts Price Target By $75

Moreover, Wells Fargo has also lowered Tesla's price target by $75. As a result, the new target price for Tesla is now $125, according to Wells Fargo.

Another forecast made by Wells Fargo was that Tesla stock faces a downside risk of as much as 30%. For now, the last known trading price of Tesla was $177.54.

They added that the Tesla stock doesn't look so much magnificent right now. If we look at the stock performance, it is already down by 28.5% YTD, while the S&P 500 is up by 8.5%.

After looking at the fundamentals of Tesla stock, the experts added that the company faces downside risk in terms of volume as the price cuts are no longer having a big enough impact.

For the year 2024, Wells Fargo added that the trading volumes in Tesla will remain flat. For 2025, the trading volumes will actually go down, which isn't a good sign at all for Tesla.

Another thing going bad for the company is price cuts along with disappointing deliveries. Together, these factors can lead to a negative EPS value in Tesla.

For the years 2024 and 2025, the earnings estimates set by Wells Fargo are below forecast by 32% and 52%. For a large stock like Tesla, this is very shocking and doesn't paint a good path ahead for the company.

When compared with its peers of the magnificent 7, it is currently trading with a 58x PE while others are at 31x. So even on that front, it appears that Tesla faces more headwinds ahead.

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