After experiencing weeks of steady decline, Tesla (TSLA) stock shows no signs of reversing the current bearish momentum affecting its performance. The leading electric vehicle (EV) manufacturer saw a surge in interest following President Donald Trump’s victory in November 2024. However, since Trump took office, Elon Musk's controversial actions in Congress and his involvement with the so-called Department of Government Efficiency (DOGE) have sharply reversed this upward trend.
It’s important to note that many prominent tech stocks are facing challenges as economic uncertainty continues to pressure financial markets. However, TSLA stock has seen a more significant decline than most of its peers among the Magnificent 7, dropping over 33% in just the past month. As the outlook for investors worsens, questions arise regarding Musk's focus and whether he will return to prioritizing Tesla's core operations.
In light of the tech sector’s high volatility, one of Wall Street’s well-known TSLA bulls, Dan Ives from Wedbush Securities, has adjusted his optimistic outlook on the stock. Historically, Ives has maintained a bullish stance on both Musk and Tesla, currently holding an Outperform rating and a price target of $550, despite the stock trading at $230 per share. On March 6, Ives’ team added TSLA stock to the Wedbush Best Ideas List; however, a follow-up report released just days later conveyed a more cautious tone.
This latest report begins with a definition of "balance," highlighting its apparent absence in Musk's management of Tesla. Ives and his team express concerns that Musk's involvement with DOGE is detracting from his leadership capabilities at Tesla, which could be alarming for investors. They note that Musk has not visited any Tesla facilities in recent months, suggesting that “perception has become reality for Tesla shares.” This situation has culminated in what the analysts describe as a “moment of truth” for Musk and Tesla.
The report states, “The more Musk doubles down on DOGE and the Trump Administration, we have seen protests erupt at Tesla dealers and violence against Tesla drivers in various locations across the US and Europe.” The stock has faced significant pressure, dropping over 50% from its December highs, leading to growing impatience among Tesla investors as Musk seems disconnected from their concerns.
While Ives maintains a bullish thesis on TSLA stock, he acknowledges that Trump’s presidency may create a faster route for an autonomous federal roadmap, which could benefit Tesla. However, it's essential to recognize that other automakers are currently outpacing Tesla in autonomous driving technology. For instance, BYD Company (BYDDF), a leading Chinese tech firm, appears well-positioned to dominate the autonomous driving market in China, potentially threatening Tesla’s market share.
In summary, while Wedbush’s recent report reiterates Ives’ bullish perspective on Tesla stock, it also emphasizes the growing concerns surrounding Musk’s leadership. If Musk continues to focus primarily on DOGE instead of Tesla, the company’s brand could suffer significant and lasting damage. The report concludes that “while the near-term fundamentals are soft for Tesla and Street numbers for 2025 continue to come down, the medium and long-term innovation cycle at Tesla is as bright as it's ever been.” This highlights the pressing need for Musk to navigate the turbulent waters ahead effectively. Historically, Musk has always risen to the occasion for Tesla, but this time he faces unprecedented distractions, given his close alignment with the President of the United States.
