Key Takeaways
- Tesla shares fell for a third consecutive session on Thursday as investors question how the EV maker will drive growth in the coming year amid slowing EV demand, price reductions and intensifying competition.
- Wells Fargo and UBS have downgraded the company’s stock this week.
- Tesla shares have lost 35% of their value since the start of the year.
- The Tesla share price may find support from the lower trendline of a descending channel chart pattern.
Tesla (TSLA) shares motored lower for a third consecutive day on Thursday as investors question how the electric car maker will drive growth in the coming year. The latest decline has pushed the year-to-date loss for the stock to 35%.
On Wednesday, analysts at Wells Fargo downgraded the underperforming Magnificent Seven member’s stock to “underweight” from “neutral,” saying that it’s a “growth company with no growth.” Analysts at the bank forecast the carmaker’s growth to flatline this year before declining in 2025 as increasing competition and disappointing deliveries pressure the company to slash its vehicle prices.
Throughout 2023, the company reduced prices multiple times to ramp up sales volumes, squeezing its margins in the process. In January, Tesla CEO Elon Musk cautioned investors about a sharp slowdown in sales growth this year due to a time gap between its Models 3 and Y, which rolled off the production line between 2017 and 2020, and its next generation lower-priced vehicle, which the company expects to start production in the second half of next year.
UBS also downgraded the company’s stock this week, citing concerns over slowing demand for EV’s and intensifying competition from Chinese rivals. Recent industry data showed the country’s electric vehicle sales slowing over the first two months of this year compared to 2023, prompting Tesla’s key Chinese competitor BYD (BYDDF) to announce further discounting of its vehicles.
Despite the bearish sentiment surround the plug-in automaker, Wedbush analyst Dan Ives sees plenty of upside in the company’s stock, citing tailwinds from artificial intelligence (AI) and the rollout of self-driving automation technology. “The demand story for EVs globally has clearly moderated, however we believe Tesla is on the broader trajectory to see growth and margin improvement return to the story over the coming quarters,” he wrote in a note to clients.
The Tesla share price has traded within a seven-month descending channel to establish clearly identifiable areas of support and resistance. The most recent bounce from the bottom of the pattern stalled near the closely-watched 50-day moving average, with the stock now trading again at the channel’s lower trendline. Given the price’s proximity to crucial chart support, keep an eye out for key reversal candlestick formations, such as a hammer or bullish engulfing pattern, which could indicate a gear shift back to the upside in Tesla shares.
Tesla shares fell 4.1% Thursday to close at $162.50.
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