- Tesla (TSLA) shares, down 41% year-to-date and currently trading at $227.34 after a 13.45% drop, have shed over $700 billion in market value since mid-December, amid protests over Musk’s Trump ties and federal job cuts.
- UBS analyst Joseph Spak cut his price target by $34 to $225, forecasting a 26% drop in first-quarter deliveries from Q4 2024, a 10.3% gross margin, and earnings of 37 cents per share, 28% below consensus.
- Spak predicts 2025 deliveries at 1.7 million units, down 5% from 2024, with new lower-cost vehicles priced $5,000 to $7,000 below Model 3 and Model Y potentially eroding demand and margins.
Tesla (TSLA) is grappling with a complex landscape as its stock, down more than 41% year to date and trading at $227.34 after a 13.45% drop on Monday, reflects a loss of over $700 billion in market value since its mid-December peak. Despite a year-over-year gain of nearly 33%, the electric vehicle maker’s global brand is under strain, partly due to Elon Musk’s ties to President Donald Trump and his involvement in a federal cost-cutting initiative that has led to tens of thousands of job cuts. This backlash has manifested physically, with “Tesla Takedown” protests targeting showrooms in cities like New York and Chicago, where activists decry Musk’s influence.
UBS analyst Joseph Spak, lowering his price target by $34 to $225, highlights softening demand as a key pressure point, with UBS Evidence Lab data showing Model 3 and Model Y delivery times shrinking to within 2 weeks in major markets. He predicts a sharp 26% drop in first-quarter deliveries from the fourth quarter of 2024, and a 5% decline from the prior year’s first quarter, despite promotional efforts that may lift end-of-quarter numbers. These promotions, however, are expected to squeeze Tesla’s profitability, with Spak forecasting a gross margin of 10.3% – down 3 percentage points from the fourth quarter and 6 points from a year ago – driving first-quarter earnings to 37 cents per share, 28% below consensus estimates.
Looking ahead, Spak trimmed his 2025 delivery forecast to 1.7 million units, a 5% decline from 2024 and 14% below Wall Street’s expectations, citing challenges even as Tesla introduces lower-cost vehicles priced $5,000 to $7,000 below the Model 3 and Model Y. While these new offerings may boost volume, Spak warns they could cannibalize demand for existing models and carry lower margins, given the difficulty of cutting costs sufficiently. Tesla’s current $227.34 share price, the lowest since late October, underscores investor concerns, yet its ability to navigate these headwinds will hinge on balancing innovation with profitability in an increasingly weak and skeptical market.
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