Tesla (NASDAQ:TSLA) shares were riding high following Trump’s November election win but practically all the gains accrued since have now been handed back to the market.
Rather than serving as a meaningful tailwind, CEO Elon Musk’s close ties to the new administration have backfired. His increasingly polarizing persona has alienated a significant portion of Tesla’s consumer base, with many now viewing him as a toxic figure. The impact has been brutal: plummeting car sales across multiple regions and a stock price that has nosedived 42% year-to-date.
So how can Tesla restore investor sentiment? Oppenheimer’s Colin Rusch, an analyst ranked in the top 1% of Wall Street stock experts, offers solutions.
“With investors now fully aware of the consumer backlash on CEO Elon Musk’s political activities and sales expectations for 2025 declining, we believe the next leg of the TSLA trade will be determined by the company’s ability to replace a portion of its consumer base while demonstrating progress on key autonomy and AI initiatives,” the 5-star analyst said.
But don’t expect an easy fix. The 5-star analyst remains unconvinced Tesla can pull off this balancing act, noting that “datapoints on both variables are mixed and we maintain our negative bias near term.”
The reputational damage is clear. A YouGov poll shows Tesla’s favorability rating has sunk to -12.7%, compared to the average +17.2% for other carmakers. However, there’s an unexpected shift – conservatives now view Tesla more favorably, with their rating climbing to +7.6%, up from around breakeven in 2022.
So, could conservatives ultimately save the supposedly climate-conscious Tesla? Not quite. Although Rusch thinks there is potential for a conservative customer base to form, he believes the company’s product offerings aren’t well-suited to that group, and its dealer/service network is not ideally located to reach this demographic.
Additionally, on another issue, the analyst continues to be worried about recent high-profile exits and the risk of talent loss as the company’s brand becomes more politicized.
Meanwhile, autonomous performance is improving but still faces challenges. Teslafsdtracker.com, which crowdsources data on FSD performance, shows that version 13.x of the software achieves 233 miles between critical failures during city driving (up from 104 miles with version 12.x). “While this is a meaningful improvement, we note data continues to point to challenged performance in inclement weather and remains substantially behind key peers’ driver outperformance,” Rusch commented on the matter.
As for the stock, Rusch remains unconvinced Tesla can pull off the necessary turnaround in the near term. He rates TSLA a Market Perform (i.e., Neutral) and does not assign a price target. (To watch Rusch’s track record, click here)
Meanwhile, of the 36 analyst reviews posted during the past 3 months, the ratings split into 13 Holds, 12 Buys and 11 Sells, all culminating in a Hold consensus rating. Nevertheless, going by the $330.39 average target, TSLA stock will gain 46.5% in the months ahead. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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