Tesla Stock: Wells Fargo Remains Firmly Bearish Despite Raising Target

Tesla's stock (NASDAQ: TSLA) is trading 0.92% lower in the pre-market following a mixed note out of one analyst. The Tesla price target was raised by Wells Fargo, even as the firm maintains an ‘Underweight' rating, remaining scepitcal on the company's prospects from here.

Despite raising their price target from $120 to $130, Wells Fargo's updated 2026 outlook suggests a potentially challenging road ahead for Tesla, particularly if key ventures like Robotaxi and Optimus fail to meet expectations. The firm projects a substantial downside risk, estimating a potential 70% decline from current levels. This assessment comes amidst ongoing debates regarding Tesla's long-term growth trajectory and recent catalysts influencing market sentiment.

Wells Fargo's bearish stance is rooted in concerns about declining sales, margin pressures, and delivery growth. The firm's analysis indicates that Tesla's sales have dropped 16% year-to-date as of March 2025. European sales figures are particularly concerning, with a 45% decrease in January and a 41% drop in February across the region's top nine markets. These figures highlight potential challenges in maintaining sales momentum in key international markets.

Further exacerbating concerns is the anticipated pressure on Tesla's auto gross margin. Wells Fargo projects a decrease of approximately 130 basis points year-over-year, excluding credits. This decline is attributed to potential further price reductions and lower overall volumes, factors that could significantly impact Tesla's profitability.

Delivery growth is another area of concern for Wells Fargo, which projects that Tesla's full-year 2024 deliveries will remain flat at around 1.8 million units. This projection is about 10% below consensus estimates, suggesting that the firm anticipates a more subdued performance compared to market expectations.

The market's reaction to Wells Fargo's revised price target and continued bearish outlook has been mixed. Tesla's stock price, while showing resilience, reflects a complex interplay of factors influencing investor sentiment. The current valuation suggests that markets are considering factors beyond immediate sales and margin pressures, such as Tesla's advancements in autonomous driving technology and its expanding energy solutions business.

The divergence between Wells Fargo's pessimistic outlook and the stock's current valuation highlights the challenges in assessing Tesla's true potential. While concerns about near-term fundamentals persist, the market's response indicates a broader consideration of Tesla's long-term growth prospects and innovative initiatives.

Flipping bearish analysts may not be on the horizon for TSLA anytime soon, yet after a run that has seen Tesla's stock add 40.43% over the past 6 months, bulls may not need to.

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