A Wall Street Analyst Says Tesla Stock Could Plunge 50%. Is It Time to Sell the Stock?

Group 1: Analyst Sentiment - Wall Street analysts are increasingly bearish on Tesla, with Wedbush analyst Daniel Ives calling the recent delivery report a "disaster" while maintaining an "outperform" rating and a $550 price target [1] - Wells Fargo analyst Colin Langan has a more critical stance, assigning an "underweight" rating and a $130 price target, predicting disappointing delivery numbers and declining earnings [2][5] - Langan expresses skepticism about Tesla's robotaxi ambitions, suggesting that investors may face disappointment if a paid fleet is not operational by June [3] Group 2: Valuation Concerns - Tesla's stock is considered overvalued, carrying a forward price-to-earnings (P/E) ratio of over 100 based on 2025 estimates, while profitable peers have multiples under 8 [6] - The company's valuation hinges on its success in the robotaxi business, but there are significant questions regarding its technology and competition from established players like Waymo [11] Group 3: Technology and Safety Issues - Tesla is lagging in the autonomous driving race, with Waymo already providing public autonomous rides since October 2020, while Tesla has not fulfilled its autonomous driving promises [8] - Tesla's full self-driving (FSD) technology has faced criticism for safety issues, including incidents where vehicles behaved erratically in adverse weather conditions [9] - In China, Tesla's FSD trial has resulted in fines for drivers due to traffic violations, leading to the suspension of the trial [10] Group 4: Market Challenges - Tesla's core automobile business is struggling, particularly in China due to increased competition, and in the U.S. and Europe due to brand damage linked to CEO Elon Musk's political involvement [12] - Given the high valuation, challenges in the auto business, and issues with autonomous driving technology, there is potential for further downside in Tesla's stock [13]