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Tesla Stock Heads for 9-Week Slump. Owners Are Trading in EVs at Record Levels, Says Report.

  • 21.03.2025 09:11
  • msn.com
  • Keywords: Stock Drop, Brand Problem

Tesla's stock dropped as owners traded in their vehicles at record levels, raising concerns about the brand's image amid CEO Musk's political activities. Analysts remain mixed on the long-term impact, with some下调ing targets but others still optimistic about AI and self-driving potential.

Tesla ReportsTSLAsentiment_dissatisfiedMS/PLsentiment_dissatisfied
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Estimated market influence

Tesla

Tesla

Negativesentiment_dissatisfied
Analyst rating: Neutral

Tesla's stock is dropping due to record vehicle trade-ins and negative market sentiment.

Morgan Stanley

Negativesentiment_dissatisfied
Analyst rating: —

Morgan Stanley analyst reduced Tesla's target price and delivery volume estimates, impacting investor confidence.

Context

Analysis: Tesla Stock Decline and Market Implications

Overview

  • Tesla stock dropped 0.5% in premarket trading at $235.03, with broader indices also falling slightly.
  • The decline follows a Reuters report indicating record levels of Tesla vehicles being traded in.

Key Data Points

  • Trade-in data:
    • Teslas from model year 2017 or newer accounted for 1.4% of all traded-in vehicles (up to March 15), up from 0.4% in March 2023.
  • Analyst downgrade:
    • Morgan Stanley analyst cut Tesla's Q1 delivery estimate to 351,000 units, down from 415,000, and lowered the target price to $410 per share.

Market Trends and Business Impact

  • Weak sales and falling estimates:
    • Reduced delivery volumes have driven downward adjustments in market expectations.
  • Brand concerns:
    • Investors fear Tesla's brand image is at risk due to CEO Elon Musk's political activities, particularly among left-leaning buyers seeking green alternatives.

Competitive Dynamics

  • Analyst Contrasts:
    • Morgan Stanley analyst remains optimistic about Tesla's AI and autonomous vehicle potential but highlights execution risks.
    • Wedbush analyst notes a "tipping point" in brand risk due to Musk's focus on political activities, while TD Cowen analyst suggests Tesla could gain red-state buyers despite the divide.

Strategic Considerations

  • Brand Dilution:
    • Concerns about Tesla becoming a political symbol could harm its appeal as a mass-market automaker.
  • Musk's Diversification:
    • Analysts note Musk's focus on Twitter/X (formerly known as Twitter) and his role in Mar-a-Lago may divert attention from Tesla.

Long-Term Effects

  • Potential Market Shift:
    • If Tesla loses blue-state sales but gains red-state buyers, net sales could still grow. However, this risks alienating a significant portion of its core customer base.
  • Investor Sentiment:
    • Weak sales and falling estimates have increased investor nervousness, with Tesla stock down 5.5% for the week, heading toward a 9-week slump.

Conclusion

  • Near-Term Outlook:
    • Tesla faces immediate challenges from falling stock prices and reduced analyst targets.
  • Long-Term Risks:
    • The brand's political positioning could impact its ability to appeal broadly, with potential long-term effects on market share and profitability.