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Analysts Tesla Stock Forecast Shaped By Electric Vehicle Demand Downturn – Is It That Bad?

Analyst Team trader
Updated 6 Mar 2024

In the first quarter of 2024, Tesla Inc, a front-runner in the electric vehicle (EV) market, has navigated through tumultuous waters as the industry contends with a notable drop in demand. After experiencing a series of declines, with its stocks dropping more than 28% in the past 6 months, experts have been closely watching Tesla for any signs of a significant rebound or further deterioration.

The lacklustre demand for EVs in 2023 set a challenging backdrop, which extended into the new year when both Lucid and Tesla shares plummeted. Tesla, in particular, suffered in maintaining its sales foothold in international markets such as South Korea. The sour sentiment appeared to lift momentarily in February, as a market rally brought a brief period of improvement for EV companies. Unfortunately, the respite was short-lived for U.S. firms, as the decline resumed by early March.

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As investors look to analysts for guidance during these volatile times, the industry experts themselves seem to be at crossroads regarding Tesla's future performance. Among 35 analysts surveyed on TipRanks, the majority have placed Tesla in the “hold” category, indicative of a cautious approach amidst the current uncertainties. Meanwhile, 11 analysts maintain a “buy” rating, apparently confident in Tesla's resilient fundamentals and growth potential. Countering the optimism, five analysts are steering clear with a “sell” recommendation.

The consensus among analysts has pegged Tesla's average stock price target at $210.78 for the next 12 months which remains some 16% up on todays' share price. This consensus figure belies a significant spread in viewpoints, with the most bullish analyst setting a lofty $320 target and the most bearish going as low as $23.53—a stark reminder of the deep divisions in the investment community regarding the EV giant's prospects.

Reflecting ongoing scrutiny and adjustments, prominent financial institutions have recently updated their price targets for Tesla. Morgan Stanley's Adam Jonas trimmed the price target from $345 to $320, possibly factoring in the latest industry dynamics. UBS expressed a moderated stance by reaffirming a neutral outlook, accompanying it with a $225 price target. Furthermore, RBC Capital marked a modest adjustment from $297 to $298 in their analysis on March 5th.

However, not all financial institutions are leaning towards optimism. Bernstein is firmly in the bearish camp, labelling Tesla as a “sell” and setting an austere 12-month price target of $150.

Tesla's shares have indeed reeled from significant pressure, recording a 6.74% decline over the past year. The stock last closed at $180.74, levels that investors have not observed since the spring of 2023.

The dissonance between analyst expectations highlights the complex and multifaceted challenges facing Tesla and the EV industry at large. With some of the doom and gloom surrounding the Tesla share price, analysts consensus at more than 15% above todays' price would be something many investors would be quite happy to see. Is it really that bad then, or is there more to come?

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.