Tesla (NASDAQ:TSLA) shares are back on the rise, but their post-election rally has been on shaky ground. The stock has come under pressure as investors appear increasingly willing to back away from the EV giant. Ironically, the same factor that sent Tesla soaring after the election now seems to be weighing it down.
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Elon Musk’s bold bet on Trump initially looked like a jackpot, with investors banking on a deregulation wave that could supercharge Tesla’s autonomous ambitions.
However, it is Musk’s heavy involvement in the administration and his role as head of DOGE (department of government efficiency) that now appears to be the reason behind the stock’s struggles.
Wedbush analyst Daniel Ives thinks that the concern on Wall Street is that Musk is spending so much time on DOGE, that it is distracting him from focusing on Tesla at a critical time for the company this year.
“The autonomous and robotics battle for market share is in full force both in the US and China and many on the Street view Musk spending ‘100% of his time’ with DOGE as creating a negative perception around his Tesla focus,” the analyst went on to say.
Furthermore, Musk’s actions related to DOGE and his growing alliance with Trump could potentially alienate some consumers, causing them to distance themselves from the Tesla brand. This trend has gained some momentum in Europe and certain areas of the US since November. However, that is not much of an issue for Ives, who views that development as “containable brand issues for Tesla for now that are not a major cause for concern.”
That’s because the “holy grail” for Tesla and Musk now revolves around autonomous and FSD. Ives is sanguine about EV sales growth, saying that if Tesla’s deliveries growth in 2025 falls from around 20% to 10%, it might impact the numbers for this year, as seen in the recent earnings report, but that doesn’t affect the “core long-term valuation and Tesla growth story.” While the delivery numbers have been uneven so far, Ives makes the case it’s still early in the year, and he expects “modest delivery growth” to be on the menu again, particularly with a more affordable model on the way.
The new, cheaper model is one of several catalysts ahead as the company is also making significant strides in autonomous technology and the Optimus project across its global production network. Additionally, the unsupervised FSD launch in Austin is scheduled for June.
So, what’s the bottom line? Ives isn’t sweating the short-term noise. He rates TSLA shares an Outperform (i.e., Buy), with a $550 price target – implying a ~55% upside from current levels. (To watch Ives’ track record, click here)
Tesla usually draws a diverse range of opinions on Wall Street and the same is true right now. Based on a mix of 13 Buys, 12 Holds and 10 Sells, the analyst consensus rates the stock a Hold (i.e., Neutral). The average price target stands at $340.50, implying the stock is currently fully valued. (See Tesla 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.
