Charging Tesla Model S. Taken on July 28, 2013. Photo by: Jeff Cooper.Tesla has already lost half its value since December, but Wells Fargo says it could fall another 40%. Colin Langan, an analyst at the bank, lowered his 12-month price target from $135 to $130 on Friday and maintained an underweight rating. His new forecast means the company could drop 46% from where it is now.
The Wall Street average price target for Tesla is $372, but Langan’s outlook tells a different story. “We’ve been bearish on Tesla’s sales and margins since last year, and the concerns were largely correct,” Langan said. He pointed to a 40% drop in European sales this year, which triggered the latest stock decline. That’s not the only problem. Protests and vandalism have hit the company’s facilities, and with no sales growth in sight, Langan believes the stock’s downward momentum will continue.
Tesla’s European sales collapse adds to the crisis
Tesla is on track for its eighth straight weekly loss, the longest losing streak since it went public in 2010. In Europe, the company’s January sales fell 45%.
The problem is bigger than just weak demand. The company is dealing with political backlash after Elon Musk backed Germany’s far-right AfD party in recent elections. The response has been brutal. Customers are abandoning the brand, and the company’s facilities in Europe have been vandalized.
Langan says many investors saw weaker profits coming, but they didn’t want to bet against the stock. Now, they don’t have a choice. “Despite the 40% drop this year, we still see another 40% downside,” he said. “If fundamentals matter, the momentum likely turns negative as consensus estimates fall.”
It isn’t the only company losing support. UBS and Redburn Atlantic have also reiterated sell ratings, adding to the pressure.
Tesla and SpaceX fight U.S. trade policies
Tesla isn’t just battling falling demand. The company is also getting hit by tariffs. On Friday, Tesla and SpaceX sent letters to U.S. Trade Representative Jamieson Greer, raising concerns about Trump’s tariff policies.
Tesla’s letter, submitted by Miriam Eqab, associate general counsel, said U.S. tariffs on Chinese goods are driving up the cost of Tesla’s U.S.-made vehicles. “U.S. exporters are disproportionately impacted when other countries retaliate against U.S. trade actions,” the letter said. The company warned that these tariffs are making its vehicles less competitive, both at home and overseas.
SpaceX had a different problem. The company’s Starlink satellite service is facing foreign trade barriers that increase its costs. “The import duties in some countries significantly increase Starlink’s operating costs, while the U.S. has no such tariffs on competing products,” said Mat Dunn, senior director of global business and government affairs at SpaceX.
The letters were part of a public comment process, with over 700 companies responding to Trump’s trade policies. But the message was clear: tariffs are making its cars more expensive, damaging sales, and cutting into profitability.
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