Tesla (TSLA) remains one of the most actively traded stocks in the market. However, the electric vehicle (EV) giant is grappling with several headwinds, including lower-than-expected EV demand, intensifying price wars, and potential tariff risks. Despite these challenges, Tesla bulls continue to emphasize the company’s growth potential beyond cars, with robotics, artificial intelligence, and autonomous driving leading the charge. A major recent catalyst for Tesla has been CEO Elon Musk’s ties to President Donald Trump, which some investors view as a political advantage.
Wall Street Divided on Tesla’s Future
Despite strong investor enthusiasm, not all analysts share a bullish outlook on Tesla. Guggenheim analysts, for example, have reiterated a bearish stance, maintaining a price target of $175, which implies a significant downside from current levels.
One of the most debated aspects of Tesla’s future is its Full Self-Driving (FSD) software. The company has made strides in monetizing this high-margin technology, but concerns remain about its long-term profitability, especially in competitive markets like China. Analysts at Guggenheim caution that Tesla’s anticipated FSD rollout in China may expose key weaknesses in its autonomous vehicle ambitions, potentially leading to weaker margins more in line with traditional automakers.
Tesla’s financials illustrate some of these concerns. While revenue has slightly increased year-over-year (from $25.17 billion to $25.71 billion in the last quarter), gross profit has declined by approximately 5.8%. The company’s gross margin now stands at 16.25%, down from 17.6% a year ago, indicating mounting cost pressures. Guggenheim analysts warn that Tesla’s ability to price FSD competitively in China, along with regulatory challenges related to data export and computing requirements, could further pressure the stock.
The Broader Analyst Sentiment
Guggenheim is not alone in its cautious outlook. Of the 40 analysts covering Tesla, 10 have issued “Strong Sell” ratings. While the average price target for Tesla is currently $348.61 per share, price estimates vary widely, ranging from $120 to $550. This divergence suggests that Tesla could experience elevated volatility over the next 12 months. Guggenheim’s $175 price target represents a downside potential of over 30%.
Tesla’s brand perception has also been a topic of debate, particularly as Musk’s political engagement continues to influence market sentiment. While some investors see his close ties to Trump as a strategic advantage, others worry about the potential impact on Tesla’s consumer appeal.
Navigating Uncertainty in Tesla’s Stock
Beyond concerns surrounding FSD, Tesla’s stock faces broader questions regarding its sales momentum, profitability, and competitive positioning in the global EV market. The company has a robust balance sheet, with more cash than debt and a current ratio exceeding 2x. However, with sales growth slowing and margins compressing, investors remain divided on whether Tesla can sustain its historical valuation premium.
The unwinding of the so-called “Trump trade,” which previously boosted Tesla’s stock into late 2024, could also contribute to further downside pressure. As the political and macroeconomic landscape continues to shift, Tesla’s trajectory in the near term remains highly uncertain.
