The Most Negative Noodles We've Seen in the Past Few Years": Why Several Wall Street Analysts Are Down on Tesla

• So far this year, Tesla shares have fallen nearly 30%, a number of Wall Street firms downgraded its rating.

• Wells Fargo, Wedbush Securities and Bernstein are the latest to lower their expectations for the electric-car maker.

• They cite disappointing deliveries, declining demand and leadership rushes.

While the stock market indexes continue to hit record highs this year, 2024 will not be kind to Tesla.

In less than three months, the electric-car maker's shares have fallen nearly 30% and lost more than $230 billion in value. As of Thursday's close, the stock was trading at $175.79.

Here are three companies that lowered their Tesla price targets and why:

Wells Fargo Bank

Two weeks ago, analysts at Wells Fargo wrote, "Tesla has become a 'no-growth growth company.'" They downgraded Tesla to "hold" and lowered their price target from $200 to $125 per share.

These strategists warned that demand for electric cars will slow this year, which could force Tesla to impose more price cuts on its products.

Lower pricing and recent disappointing deliveries bode poorly for Tesla's EPS, which Wells Fargo expects to be 32% below expectations this year.

Investors are unlikely to be reassured by the upcoming Model 2 because, in addition to being 'rushed', its more affordable pricing means lower margins," Wells Fargo said.

But analysts still applaud some of Tesla's practices, such as its so-called out-of-the-box production methods that can reduce costs. Wells Fargo is also bullish on Tesla's fully autonomous driving and Dojo supercomputer, if the company succeeds in implementing those technologies.

Wade Bush Certificates

While Wedbush Securities remains bullish on Tesla, it has lowered its price target for the company from $315 to $300 per share. However, the firm maintains an "outperform" rating on Tesla, saying that corrective action could help.

In a report on Thursday, analysts led by Dan Ives slammed Tesla's first-quarter "nightmare," citing a drop in deliveries to China as the culprit for its weak performance; Wedbush said Tesla is now unlikely to reach this year's projected 2.1 million deliveries.

Supply problems such as a factory fire in Berlin also exacerbated the problems in the quarter, Ives wrote.

At the same time, he noted that investors are starting to get impatient with the company's leadership. Among the reasons cited were Chief Executive Officer Elon Musk's plan to move the artificial intelligence program outside of Tesla, and a dispute over pay and benefits in a Delaware court.

"Ives writes: "We believe that Tesla's negative reports are the same as what we have seen over the past few years, and that Mas resonance/Tesla has been hit by a bear market from all sides." But unlike other times, this is now a valid argument, as Tesla has been suffering from weak growth, margin compression, and the Chinese market is a nightmare."

Ives remains confident in Tesla's fully autonomous driving and self-driving technologies, which will ultimately support Tesla's valuation.

Bernstein (name)

Bernstein lowered his price target for Tesla shares to $120 from $150 per share and reiterated an "outperform" rating in a report released Tuesday.

Analysts led by Toni Sacconaghi say the electric car maker is on track for modest growth in both 2024 and 2025. Bernstein lowered Tesla's production forecast for the two years because the slowdown in the popularity of electric cars in Europe and the United States has reduced consumer demand for Tesla products. Demand in China is also weak, Bernstein said.

Analysts write that the high valuation of Tesla's stock is hard to justify given its growth prospects. While Tesla's profit margins are comparable to those of other automakers, Tesla's stock price is significantly higher compared to those competitors.

Bernstein said Tesla's fully self-driving technology could add $40 to earnings per share, but noted that pricing would be competed away because Tesla isn't the only company pursuing FSD. The company is already lagging behind in robotics, artificial intelligence and robotic taxi services.

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