TLDR
- Tesla stock up 1.5% in premarket after falling 38% year-to-date and 41% since inauguration
- Q1 deliveries missed expectations with 337,000 units, down 13% from previous year
- Analysts cite CEO’s political activities, competition, and aging product lineup as factors
- New affordable model in Q2 and Austin robotaxi launch in June viewed as key recovery catalysts
- Average analyst price target of $305.93 suggests 21% upside potential despite mixed ratings
Tesla shares gained ground in Monday’s early trading session, offering a glimmer of hope after months of decline. The electric vehicle giant’s stock rose 1.5% to $256.09 in premarket activity.
Market watchers are looking ahead to Tesla’s imminent earnings report with tempered expectations. This comes as the stock has weathered a challenging 2025 so far.
The numbers tell a stark story. Tesla shares have plummeted 38% since January and dropped 41% since the presidential inauguration on January 20.
Daily stock movement has grown more volatile as well. Shares have swung an average of 4.1% in either direction since inauguration day, up from 2.9% in the previous year.
Despite these concerning trends, some analysts see potential for a turnaround in Tesla’s fortunes.
Sales Challenges and Political Factors
Tesla’s first-quarter delivery figures disappointed investors. The company delivered approximately 337,000 vehicles, falling 13% year-over-year and missing Wall Street forecasts by about 40,000 units.
Several factors may have contributed to this underperformance. Benchmark analyst Mickey Legg points to “political blowback” as one element affecting Tesla in Q1.
Other headwinds included intensifying global competition, the company’s aging vehicle lineup, uncertainty regarding regulations, and tariff concerns.
Some market observers have suggested that CEO Elon Musk’s political activities have hurt the brand’s image and worried investors. However, rumors suggest Musk’s role in the new administration may become less prominent going forward.
Tesla does have one advantage regarding tariffs. Unlike many competitors, the company doesn’t import any vehicles it sells in the U.S., manufacturing them instead at its California and Texas facilities.
Looking Forward: New Products on the Horizon
RBC analyst Tom Narayan believes Q1 results “could benefit from pre-buy in March ahead of tariffs.” Dealers may have stocked up to avoid potential tariff increases.
More importantly, both Narayan and Legg highlight two upcoming catalysts that could revive Tesla’s momentum.
First is a new, more affordable Tesla model expected to launch in the second quarter. This could help refresh the company’s product lineup and potentially boost lagging sales figures.
Second is the debut of Tesla’s robotaxi service in Austin, scheduled for June. While the initial rollout may be limited in scope, analysts will watch closely to see how quickly the service expands.
Longer-term, Legg views Tesla’s Optimus robotics project as a potential “game changer.” This initiative could transform Tesla from primarily an automaker into a “broad automation provider.”
Analyst Ratings and Price Targets
Wall Street remains divided on Tesla’s prospects, though many see upside potential from current levels.
RBC’s Narayan maintains a Buy rating with a $314 price target, recently reduced by $6. Benchmark’s Legg lowered his target from $475 to $350 but keeps a Buy rating and added Tesla to Benchmark’s Best Ideas list.
The average analyst price target stands at approximately $342 per share, according to FactSet data. This represents a substantial increase from $192 a year ago.
However, the consensus target has fallen from its peak of $381 reached in early February, before concerns about Musk’s political activities gained traction.
Overall, Tesla has support from 16 analysts on Wall Street. However, an additional 11 rate it as Hold and 11 as Sell, resulting in a Neutral consensus rating.
Despite these mixed opinions, the average price target of $305.93 suggests potential returns of 21% over the next twelve months.
Both analysts and investors will be watching Tesla’s upcoming earnings report closely. The results could provide crucial insights into whether the company can overcome recent challenges.
Much attention will focus on commentary regarding the new affordable model and robotaxi service. These upcoming launches may determine if Tesla can reverse its 2025 stock decline.
The current share price reflects lowered expectations. As Narayan notes, “Expectations are already quite low, and any positive news could result in upside to shares.”
Tesla’s ability to execute on its upcoming product launches will likely play a decisive role in determining whether the stock can stage a meaningful recovery in the months ahead.
