Shares of Tesla (TSLA 1.30%) traded close to 6% lower, as of 10:31 a.m. ET today, but had traded as much as 10.5% down before broader market volatility set in, causing volatile swings in shares. Longtime bull Dan Ives, an analyst at Wedbush, slashed his price target on the electric carmaker by 43%, while maintaining a buy rating.
"Brand crisis tornado"
Ives, who formerly had the highest price target on Wall Street, lowered his expectations on Tesla's stock from $550 per share to $315, which still implies significant upside from current levels, although shares of Tesla are off some 42% this year.
Ives did not hold back on the reason for the lower price target, writing, "Musk-created brand crisis + Trump tariffs = perfect storm for Tesla." All year, investors have been concerned about Tesla CEO Elon Musk and his involvement in the Department of Government Efficiency (DOGE), a new government team created by President Donald Trump to eradicate government waste. Tesla's first-quarter deliveries of 337,000 came in far worse than Wall Street's estimates, which had already been revised lower, only adding fuel to the narrative.
NASDAQ: TSLA
Key Data Points
"Tesla has essentially become a political symbol globally, and that is a very bad thing for the future of this disruptive tech stalwart and the brand crisis tornado that has now turned into an F5 tornado," Ives wrote in his report. "We now estimate Tesla has lost/destroyed at least 10% of its future customer base globally based on self-created brand issues."
Ives also pointed out that Trump's tariffs will lead to higher costs for Tesla on car parts that it imports into the U.S. It could also make it harder for Tesla to compete in China, where EV company BYD already appears to have taken significant market share.
Still expensive
After such a strong rally following Trump's election win, shares of Tesla have fully retraced and are now down from Election Night. The company's core EV business is struggling and the valuation hinges on Tesla's soon-to-be-launched full self-driving and robotics divisions. Even after the intense recent sell-off, Tesla still trades at close to 90 times forward earnings. I don't want anything that expensive in this kind of market.
