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Takeaways
- Tesla shares fell 5.6% on Wednesday, ending the stock's five-day rally from a prolonged slump.
- The stock had gained more than 27% in the week leading up to Wednesday's session, boosted by the potential for watered-down tariffs and several endorsements.
- William Blair analysts on Wednesday slashed their full-year vehicle sales forecast but maintained an outperform rating on the stock, citing opportunities outside Tesla's core EV business and the likelihood dip-buyers lend the stock upward momentum.
Tesla (TSLA), the electric car maker, saw its shares fall 5.6% on Tuesday, ending a long-term slump.
Tesla shares rose more than 27% in the five sessions leading up to today's. The stock has been on a steady climb since November, when investors bought the stock in response to Trump’s election victory.
Tesla’s shares had fallen by more than 50% since their December highs, with the majority of this decline occurring in February and early march. Tesla’s key markets like Europe have seen a decline in sales this year despite a rise in demand for electric vehicles. Tesla dealerships and cars have been targeted by vandals angry about CEO Elon Musk’s political influence. Musk’s corporate work and government duties have led to public concern from ardent bulls.
But the price of Tesla's stock at times appears to have little connection to the health of its EV business, a disconnect that was apparent Wednesday when William Blair analysts cut their full-year vehicle sales estimate by more than 10% while maintaining their outperform rating on the stock.
The analysts wrote that despite the correction in the auto market near term, they remain optimistic about the faster than expected ramp up of Megapack business and the ride-sharing business rolling out this coming year. Megapack is Tesla’s industrial scale energy storage product.
Trading Tesla stock, the analysts said, has often "been a function of momentum." For that reason, they argue the stock's significant pullback is a reason for optimism in and of itself. “We think expectations are nearing the bottom and, as they reset themselves, shares will bottom, and momentum will rebound,” wrote the analysts.
What's Saved Tesla's Stock From Free Fall?
Musk and his cronies have launched a campaign to minimize the damage this month. Trump said to his followers two weeks ago on Truth Social that Musk would be supported by him buying a Tesla. He then held a press event on the South Lawn of the White House where he inspected and praised Musk’s five Teslas.
During a television appearance on Wednesday, Commerce Secretary Howard Lutnick encouraged Americans to purchase Tesla stock.
“It’s incredible that this guy’s stocks are so cheap.” Lutnick, Fox News, said that the stock will never be so cheap again. Musk told employees to keep their stocks during a meeting of all hands the following day.
Tesla’s latest winning streak started last Wednesday, after the Federal Reserve released its updated economic outlook in which officials predicted cutting interest rates two times this year. Stocks were also boosted by reports early this week that the Trump Administration is considering limiting its tariffs, which it plans to implement on April 2nd.
Retail investors have been eagerly buying the dip. Tesla stock was reportedly piled up at a record rate during its recent decline.
Update—March 26, 2025: This story has been updated to reflect the market close.
