Tesla TSLA Plunges 3.389% as Morgan Stanley Downgrade Sparks Valuation Concerns

Dec. 9, 2025 – Tesla shares fell 3.389% in pre-market trading, marking a sharp reversal as fresh analyst commentary weighed on investor sentiment.

The decline followed Morgan Stanley analyst Andrew Percoco’s revised stance on the stock. Percoco downgraded Tesla to “Equal-Weight” from a previous bullish rating, citing valuation concerns despite acknowledging progress toward CEO Elon Musk’s pay package milestones. The firm set a $425 price target, reflecting a cautious outlook amid broader market skepticism about stretched multiples in the EV sector.

While some reports highlighted a price-target hike and optimism around production targets, the downgrade signal dominated trading dynamics. Analysts noted that the shift underscores growing scrutiny of Tesla’s growth trajectory, particularly as competitors intensify competition in both EVs and AI-driven innovation. The move also highlighted leadership transitions at Morgan Stanley, where Percoco took over coverage from Adam Jonas, reshaping institutional positioning.

Investors appeared to price in the downgrade, with pre-market weakness suggesting a potential near-term consolidation phase. The stock’s performance remains closely tied to execution risks and macroeconomic factors, as investors balance Musk’s ambitious roadmap against evolving market conditions.