Wells Fargo Predicts Tesla Shares to Drop on Lower Demand and Margins

July 2, 2024: Wells Fargo & Co. (WFC), a prominent financial institution, has issued a forecast predicting a decline in Tesla, Inc. (TSLA) stock price during the third quarter (Q3) of 2024. This prediction is primarily based on anticipated lower demand for Tesla vehicles and a potential decrease in the company’s profit margin.

The analysts at Wells Fargo acknowledge that short-term fluctuations in the stock market are commonplace. However, they express specific concerns regarding Tesla’s future performance. One key factor contributing to their bearish outlook is a projected decline in year-over-year delivery numbers for Tesla in 2024. This decrease is expected to fall short of industry consensus estimates.

Several factors are cited as potential reasons behind the anticipated drop in deliveries. The analysts point to diminishing returns on Tesla’s recent price cuts, suggesting that these strategies may no longer be as effective in stimulating demand. Additionally, they highlight the intensifying competition within the Chinese electric vehicle (EV) market, a crucial region for Tesla’s sales.

Furthermore, the analysts at Wells Fargo question the viability of Tesla’s self-driving technology, particularly its reliance on a camera-only sensor system. While the upcoming “Robotaxi” reveal in August 2024 may generate initial excitement, analysts express skepticism about the technology’s current state and its potential for widespread adoption shortly. They anticipate a “hype-sell” scenario, where the stock price increases pre-reveal but experiences a downward correction if the technology fails to meet expectations.

It is important to note that Wells Fargo’s forecast pertains specifically to Q3 of 2024. Tesla’s long-term outlook remains uncertain, and other factors could influence the stock price in the coming months and years.

Overall, Wells Fargo’s prediction paints a cautious picture of Tesla’s immediate future. Investors considering Tesla stock should carefully evaluate the bank’s analysis alongside other market outlooks and their own risk tolerance before making any investment decisions.

Also Read, Planned $300M Prosper Arts District Spurs Development in DFW