Tesla (NASDAQ:TSLA) and its mercurial CEO, Elon Musk, are always at the center of heated debate. As analysts publish different price targets and ratings on Tesla shares, investors may be more confused than ever. Nevertheless, I am bullish on TSLA stock because I like to be a buyer when many short-term traders are selling.
Tesla is easily the most famous automaker in America that only produces electric vehicles (EVs). Musk is a lightning rod of a CEO with controversial opinions, but there’s no denying that he built Tesla into a giant.
Yet, even giants can go in and out of favor on Wall Street. Tesla is probably the most disliked “Magnificent Seven” company right now, and at least one expert doesn’t think Tesla is magnificent. On the other hand, not every analyst is bearish on TSLA stock, so let’s see what the latest Tesla-centered debate is about now.
A Big-Bank Analyst Chops His Tesla Price Target
Like a lumberjack, Wells Fargo (NYSE:WFC) analyst Colin Langan chopped his price target on Tesla shares from $200 down to just $125 this week. With the current share price around $163, then this price target implies 23.3% downside. Along with that, Langan downgraded his rating on Tesla stock from Equal Weight (which is like a Hold rating) to Underweight (equivalent to a Sell rating).
Bear in mind that TSLA stock has already fallen from $295 to $163 since July of last year. Could it continue to drop to $125? Anything’s possible, so let’s weigh Langan’s argument before making any judgments.
Perhaps you know by now that EV demand has waned in recent months and that Musk and Tesla have attempted to boost demand by enacting vehicle price cuts. Langan apparently doesn’t feel that this strategy has been very effective. As Bloomberg reported, Langan pointed out that Tesla’s “sales volumes rose only 3% in the second half of 2023 from the first half, while prices fell 5%.”
As TheFly summarized, Langan believes that Tesla’s “price cuts are having a diminishing impact on demand.” Consequently, Langan and other Wells Fargo analysts expect Tesla’s EV-sales “volume to disappoint.”
Following this line of thought, Langan estimates that Tesla will deliver 1.8 million vehicle units this year; that result would be nearly flat with 2023’s vehicle deliveries. All in all, Langan concluded that Tesla “ain’t looking so magnificent.”
Don’t Lose Faith in Tesla
Langan’s points are duly noted, but only time will tell whether Tesla only delivers 1.8 million EVs in 2024. Besides, Tesla already warned investors that the company’s “vehicle volume growth rate may be notably lower” this year “than the growth rate achieved in 2023.”
Therefore, the market isn’t likely setting a high bar for Tesla. This would help to explain why TSLA stock is already down so much from last year’s peak price.
In sharp contrast to Langan, Wedbush analyst Dan Ives recently issued a Buy rating on Tesla stock along with an optimistic $315 price target. Ives doesn’t seem too worried about the demand side of the equation for Tesla. His assessment is that the “demand story for Tesla is more in stabilization mode heading to the rest of 2024.”
Just like Langan’s negative demand vision, Ives’ positive vision will either be confirmed or debunked in the coming quarters. Ives did make a good point, though. The Wedbush analyst stated that Tesla’s affordably-priced “Model 2… is on the roadmap for the next year.”
The Model 2 could be a game changer for Tesla and for the EV industry as a whole. One of the main complaints among automotive buyers is that electric cars are expensive. If the Model 2 gets reluctant shoppers hooked on EVs, this could be a win-win scenario for Tesla and even for the company’s competitors.
Most of all, I appreciate Ives’ argument that the market is already quite pessimistic about Tesla. He contended, “The Tesla narrative is as negative [as] we have seen in the last few years with Musk and Tesla getting attacked by the bears from all directions.” That’s exactly what I like to see before I make a contrarian stock trade.
Is Tesla Stock a Buy, According to Analysts?
On TipRanks, TSLA comes in as a Hold based on 10 Buys, 18 Holds, and seven Sell ratings assigned by analysts in the past three months. The average Tesla stock price target is $205.22, implying 26% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell TSLA stock, the most accurate analyst covering the stock (on a one-year timeframe) is Alexander Potter of Piper Sandler, with an average return of 94.77% per rating and a 56% success rate. Click on the image below to learn more.
Conclusion: Should You Consider Tesla Stock?
If you like disliked stocks, now’s the time to take a look at Tesla. Among “Mag-7” names, Tesla is mocked and disfavored. Moreover, in terms of current-year performance, the bar has been set low by some analysts and even by Tesla itself. So, believe it or not, once-loved TSLA stock is now actually worth considering as a contrarian investment.
Before you think about making a move, be sure to mull over the arguments of Langan and Ives and conduct your full due diligence on Tesla.
