‘Sell TSLA Stock Now,' Says Wells Fargo
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Langan added that in order to meet the Wall Street estimate of 411,000 units for the quarter, Tesla would need to increase June deliveries by more than 50% compared to May. As a result, the firm now projects that Tesla's full-year deliveries will fall by 21% from last year.
Tesla Faces Fundamental Challenges Ahead
Notably, Wells Fargo expects the lower delivery volume to hurt Tesla's profit margins. Langan also pointed out that reduced income from Zero Emission Vehicle (ZEV) credits could be another drag on earnings. When considering these factors alongside Tesla's planned capital expenditures exceeding $11 billion and potential issues with working capital, Wells Fargo now estimates FCF burn of $1.9 billion for 2025.
Moreover, the firm is worried about the lack of news regarding Tesla's long-awaited affordable EV, which many bulls believe is key to increasing sales in the second half. Additionally, Tesla's robotaxi plans are not impressing Wells Fargo, as the analyst notes that Full Self-Driving tests in Austin appear limited, slow, and closely monitored, which raises the risk that any accident during a rushed rollout could cause major setbacks.
Owing to the above-mentioned reasons, Langan has a Sell rating on TSLA stock with a $120 price target, which implies 62.1% downside potential from current levels.
What Is the Prediction for TSLA Stock?
On TipRanks, TSLA stock has a Hold consensus rating based on 14 Buys, 12 Holds, and nine Sell ratings. Furthermore, the average Tesla price target of $286.14 implies 9.6% downside potential from current levels. Year-to-date, TSLA stock has lost 21.7%.
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