:max_bytes(150000):strip_icc()/GettyImages-2247945019-9b498950430e4ba9a985a0a88254c8cb.jpg "Tesla Stock Just Got Downgraded by a Major Wall Street Firm. Here’s Why.")
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Key Takeaways
- Tesla stock sank Monday after the company got a downgrade from Morgan Stanley analysts
- Morgan Stanley said that the stock faces near-term risks as its EV business struggles, but still has the potential to be a leader in the self-driving software and humanoid robot industries.
The ranks of Tesla (TSLA) bulls have shrunk, as Morgan Stanley downgraded its rating on the company. Shares of the electric vehicle maker fell sharply on Monday.
“Tesla is a clear global leader in electric vehicles, manufacturing, renewable energy, and real world AI and thus deserving of a premium valuation,” analysts led by Andrew Percoco wrote in a note to clients over the weekend. “However, high expectations on the latter have brought the stock closer to fair valuation.”
Morgan Stanley lowered its rating on Tesla stock to “equal-weight” from “overweight” previously, while raising their price target to $425 from $410. Telsa shares were down 4% at around $437 in mid-afternoon trading Monday.
Tesla stock faces near-term risks such as potentially falling short of quarterly earnings estimates as its EV business struggles, which could make its next year of trading “choppy,” the analysts wrote.
Why This Matters to Investors
Wall Street remains divided on Tesla stock, with the 13 analysts tracked by Visible Alpha split between six “buy,” four “hold,” and three “sell” ratings. The stock, which has been on a bumpy ride this year, has gained less than 10% so far in 2025, lagging the performance of major stock indexes.
Here’s how the analysts value the different elements of Tesla’s business:
- EV business: $55 per share, down from $75 previously. The analysts trimmed sales estimates for next year and through 2040, as EV brands in China continue to take market share and as the U.S. adoption of EVs remains uncertain.
- Network services: $145 per share. This comprises Tesla’s self-driving software, charging network, and maintenance and service centers, which can grow as the self-driving software improves.
- Energy: $40 per share. This is made up of Tesla’s energy storage systems such as batteries and solar panels for home charging, which the analysts say can grow as demand for home energy storage and renewable energy grows.
- Mobility: $125 per share. The analysts expect Tesla to expand its markets where self-driving robotaxis are able to operate next year, estimating that Tesla will have 30,000 robotaxis on the road by 2030.
- Humanoids: $60 per share. While still in the early stages, the analysts say Tesla is “uniquely positioned to be a leader” in the humanoid robot market because of its existing manufacturing abilities and technological advantage.
The analysts also said they expect Tesla will hit seven of the 12 milestones laid out in CEO Elon Musk’s recently approved pay package, including the vehicle, Optimus and robotaxi milestones, but only three of the six profitability marks.
Tesla shares have gained 8% since the start of the year, but are down 10% from their record high set about a year ago.
