Tesla's Stock Stumbles as California Proposes Incentive Exclusion and UBS Remains Skeptical
1min read Tesla's stock saw a decline of 3.96% on Monday amid a broader analysis by UBS that casts a skeptical eye on the company's recent market performance. Despite the electric vehicle giant's meteoric valuations, UBS maintains a bearish stance, reiterating a "sell" rating and setting its target price at $226. This comes as Tesla's market value has surged by over $350 billion since the U.S. presidential election, with UBS analysts attributing this rise more to market exuberance rather than improvements in Tesla's underlying business fundamentals.
In a twist that could further affect Tesla's valuation, California's governor announced plans to exclude Tesla from the state’s upcoming electric vehicle purchase incentives. The proposed plan aims to foster competition by providing consumer incentives that do not apply to Tesla’s top-selling models. This move is perceived as a strategic effort to boost the presence of more diverse car manufacturers on the roads, though it could potentially incite tensions with Tesla's CEO, Elon Musk.
The state official noted that these incentives remain under negotiation, leaving room for potential amendments to include more brands in the scheme. However, such exclusion could place Tesla at a competitive disadvantage in a market that is increasingly leaning towards electrification, particularly given California's substantial role as a leading adopter of electric vehicles.
Tesla's stock closed at $338.59, with a market cap of $1.1 trillion. This marks a significant evaporation of $448 billion in market value overnight, suggesting investors' readiness to react swiftly to regulatory signals and market sentiment shifts.
The developments in California came alongside broader market movements that saw major indices such as the Dow Jones, Nasdaq, and S&P 500 close higher on Monday. Yet, Tesla's pronounced dip underscores the vulnerability of even major players in the face of adversarial regulatory propositions and critical market assessments.