Tesla's Shares Dropped Below The $170 Mark But Analyst Says Things Will Be Worse Off

Tesla suffered a shockingly dim sales forecast from a key analyst on Wednesday. Colin Langan of Wells Fargo stated that the electric vehicle manufacturer would see zero growth in sales this year and an even worse scenario in 2025 with sales declining.

Tesla's stock price plummeted 4.54% on Wednesday, closing at $169.48, a new ten-month low. So far this year, the stock has tumbled 32%, missing the broad recovery that has pushed the S&P 500 index up by 8.3%.

Since last year, Tesla's revenue and profit expansion pace has notably slowed down, and Colin Langan of Wells Fargo is the latest to notice a slowdown in growth in the company's core markets; on Wednesday, he downgraded the stock to a level equivalent to sell.

In a report to clients, Langan wrote that the electric vehicle manufacturer is now a growth company with no growth. He emphasized that sales in the second half of 2023 only grew by 3% compared with the first half, while prices dropped by 5%. Since the end of 2022, Tesla has repeatedly cut prices in the Chinese market, sparking a global price war.

Troubles for Tesla and electric vehicles began appearing in mid-October when Musk's company first warned of a slowdown in demand. The market sentiment worsened after Tesla stated earlier in January that growth for the year would significantly slow down. Other automakers, electric vehicle suppliers, and even car rental companies also expressed similar cautious remarks.

While the weak demand for electric vehicles caused problems for all automakers, Tesla's stock price suffered a severe hit as an astonishingly high-valued pure electric car company.

So far this year, Tesla's market cap has sharply shrunk, evaporating over $245 billion in value and falling out of the top ten companies in the S&P 500 index. This also caused Musk to lose his world's richest person title. As of the close of trading on Wednesday, his net worth is estimated at $184 billion, ranking third on the billionaire list, behind LVMH CEO Bernard Arnault and Amazon founder Jeff Bezos.

While an EV and battery technology leader, Tesla screens poorly relative to Mag 7 peers, Langan said, and he also lowered the company's per-share earnings forecast for 2024 from $2.40 to $2. At present, Wall Street analysts' average forecast for Tesla's earnings per share for this year is $3.03.

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