TLDR
- Tesla stock is on a record nine-week losing streak, down 50% from December highs
- Elon Musk held an impromptu all-hands meeting to reassure employees amid brand challenges
- Tesla vehicles face vandalism and protests as Musk’s political involvement affects brand perception
- Despite current challenges, 29 of 58 analysts still maintain “buy” ratings on Tesla stock
- Musk urged employees and investors to hold Tesla shares, highlighting future autonomous driving plans
Tesla’s stock has been on a downward spiral, setting an unfortunate record with nine consecutive weeks of losses. The electric vehicle maker’s shares have plummeted nearly 50% since reaching a post-election high of $479.86 in December 2023, wiping out approximately $771.6 billion in market capitalization.
The decline comes amid multiple challenges for the company. New data from Edmunds shows Tesla trade-ins for new vehicle purchases reached record levels in March. This follows February’s data indicating that shopping considerations for Tesla EVs hit their lowest point since October 2022.
Adding to Tesla’s troubles, nearly all 46,096 Cybertrucks ever produced have been recalled. Unlike previous Tesla recalls that could be addressed with over-the-air software updates, this one likely requires physical repairs to fix an issue with the stainless-steel panel that could fall off and create road hazards.
Elon Musk’s political involvement has become a significant factor in Tesla’s current predicament. His role in the Trump administration and connections with right-wing politicians have sparked protests at Tesla showrooms both in the United States and abroad.
The situation has escalated to include acts of vandalism against Tesla vehicles. Some protesters have even set Tesla cars on fire at dealerships and vandalized Supercharger locations.
Musk Meeting
On Thursday night, Musk held an impromptu company-wide meeting to address these concerns.
“If you read the news, it feels like Armageddon. I can’t walk past a TV without seeing a Tesla on fire,” Musk said during the meeting.
Musk attempted to reassure employees about the company’s future. “I understand if you don’t want to buy our product, but you don’t have to burn it down. That’s a bit unreasonable,” he added.
The political divide appears to be affecting Tesla’s sales patterns. Analyst Itay Michaeli at TD Cowen Securities conducted research on Tesla sales in Republican-leaning states versus Democrat-leaning states, concluding that “recent concerns over a growing political divide around Tesla’s brand are legitimate.”
Michaeli’s analysis suggested multiple possible outcomes. His base case predicts sales declines of 22-28% in blue states, but increased EV adoption in red states could potentially offset these losses, resulting in a net gain of about 107,000 vehicles.
Despite these challenges, Wall Street remains cautiously optimistic about Tesla’s long-term prospects. Of the 58 analysts polled by FactSet, 29 still rate the stock a “buy,” up slightly from 27 in December. Fifteen rate it a “hold” and 14 a “sell.”
Morgan Stanley analyst Adam Jonas maintained his “buy” rating on Tesla but trimmed his price target from $430 to $410. He attributed lower sales expectations to “competition, an aging lineup and a buyers’ strike from negative brand sentiment.”
However, Jonas views these challenges as part of Tesla’s transition from an automotive “pure play” to a diversified artificial-intelligence company. This transition, he believes, is not fully reflected in Wall Street’s current models.
During Thursday’s meeting, Musk outlined his vision for Tesla’s future. He emphasized the company’s progress in autonomous driving technology, predicting that “autonomous Teslas will be everywhere” within five years.
Robotaxi
Musk also discussed future products including the Cybercab robotaxi slated for production in 2026. He described an innovative “unboxed” assembly technique that would resemble a “high-speed consumer electronics line” rather than traditional automotive production.
Additionally, Musk revealed that Tesla built its first Optimus humanoid robot at the production line in Fremont. He projected production of about 5,000 Optimus robots this year, with a goal of 50,000 in 2026.
“It’s very difficult for people in the stock market — especially those that look in the rearview mirror, which is most people — to imagine a future where suddenly a 10 million-vehicle fleet has five to 10 times the usefulness,” Musk said, encouraging employees and investors to hold their Tesla stock.
Wall Street analysts expressed relief at Musk’s engagement with these issues. Wedbush analyst Dan Ives noted, “Challenges clearly remain for Musk and Tesla to navigate this volatile period but last night was the first step in doing this for employees, shareholders, and partners.”
