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Dow Jones NewsFeb 10, 11:55 PM UTC
MW Tesla's stock falls again, and this analyst explains how Elon Musk is a problem
By Tomi Kilgore
Stifel's Stephen Gengaro is still bullish but not as much as he had been, with consumers' opinion of Musk having 'taken a turn for the worse'
Shares of Tesla Inc. fell again on Monday, as a negative turn in how Chief Executive Elon Musk is being viewed by consumers is fueling concern that sales will take a hit.
There's also a growing unease that uncertainty caused by the Trump administration regarding incentives for electric vehicles and EV chargers could also reduce demand in the U.S. Demand for Tesla vehicles has already taken a hit overseas.
Read: Tesla's struggling in another foreign market - and this one is important
Tesla's stock (TSLA) fell 3%, and has shed 8.6% amid a five-day losing streak.
The stock dropped 10.6% last week, its worst weekly performance since early October. While it has still run up 43% since the presidential election, in which Musk was a massive financial and campaign-trail supporter of Donald Trump, it has slid about 25% since closing at a record $479.86 on Dec. 17.
Also read: Tesla's stock may see a 50% bump as Musk's 'bet for the ages' on Trump pays off
Stifel analyst Stephen Gengaro is still bullish on Tesla's stock but now a little less so, as he lowered his price target to $474 from $492 and his 2025 revenue forecast by 5% to $116.8 billion.
A big reason for his lowered outlook is Musk's political activity, which has started weighing heavily on how consumers view Tesla's EVs.
With the so-called Department of Government Efficiency, known as DOGE, "making headlines recently regarding its efforts to streamline government agencies, options of [Tesla's] CEO Elon Musk have taken a turn for the worse along political affiliations," Gengaro wrote in a note to clients.
Gengaro said Tesla's "net favorability rating," as calculated by Stifel Think Tank Group's proprietary survey data, slid close to an all-time low, which he believes could become a headwind for sales.
He said the net favorability rating decreased to 3% for the week ending Jan. 27 from 9% in January 2024. In January 2018, he noted, the rating was 33%.
The Moneyist (November 2024): I'm a Democrat who owns a Tesla. A guy shouted abuse at me for driving a car made by Elon Musk. Am I a hypocrite? Should I sell the car?
Along with this drop in favorability, Gengaro noted that the trailing four-week average for net purchase consideration for the week to Jan. 27 has also declined near fresh lows but has been generally trending lower in recent years.
Musk's political involvement and his resulting reduced popularity has already hit sales in Europe, and appears to be hurting sales in China, too. In Tesla's fourth-quarter earnings report, the company posted misses for both per-share profit and revenue and provided an outlook that also disappointed.
Gengaro said he's also concerned about how Trump's policies, which are clearly targeting the removal of financial incentives to buy EVs and to build out the network of EV charging stations may weigh on sales.
He pointed out that the Trump administration "abruptly halted" a $5 billion program to build fast chargers on highways. Gengaro acknowledged, however, that the impact of Trump's order on EV chargers is "hard to gauge," given the limited allocations of the National Electric Vehicle Infrastructure's funding to date.
Still, Gengaro remains bullish on Tesla's stock, as his lowered target still implies about 32% upside from current levels.
The positives he sees include the record-low costs of goods sold that Tesla reported for its fourth quarter, a lower-priced vehicle due out in the first half of 2025, a "Full Self-Driving" feature expected to make its public debut this year and the ramping of production of Optimus robots.
Tesla's stock has soared 86% over the past 12 months, while the S&P 500 index SPX has advanced 20.5%.
Read on:
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-Tomi Kilgore
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02-10-25 1855ET
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