‘Time to Hit the Brakes?' Says Top Analyst after Downgrading Tesla Stock (TSLA)
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What Triggered the Downgrade?
Dorsheimer sees the recent passage of the 'Big Beautiful Bill' (BBB) as a key trigger. While the removal of the $7,500 EV tax credit was anticipated, the unexpected elimination of corporate average fuel economy (CAFE) fines has raised concerns.
As a result, Tesla could lose over $2 billion in regulatory credit revenue, a major hit to its bottom line that may force Wall Street analysts to revise their earnings models.
Further, Musk recently announced the formation of the America Party in response to the BBB's passage. The move has raised concerns about his attention drifting from Tesla's core business.
Finally, Dorsheimer noted that Tesla stock's current valuation is well above that of its tech peers. With slowing momentum and regulatory headwinds, the Top analyst expects this premium to shrink. Also, Dorsheimer said that investor confidence may improve if Tesla shows progress in self-driving technology.
Is TSLA Stock a Buy?
Turning to Wall Street, TSLA stock has a Hold consensus rating based on 14 Buys, 12 Holds, and nine Sells assigned in the last three months. At $293.09, the average Tesla price target implies a 0.1% downside potential. The stock has declined 20.2% over the past six months.
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