Wedbush analysts see Tesla stock oversold amid Musk-Trump feud

Tesla's stock faced downward pressure after a public dispute between Elon Musk and Donald Trump, triggering concerns about potential regulatory hurdles, with shares falling nearly 18% in the past week. Wedbush analysts noted the souring relationship and its impact on Tesla, while Goldman Sachs lowered its price target to $285 due to concerns over vehicle deliveries, particularly in the US, Europe, and China where sales have declined. Despite these challenges and a high P/E ratio of 145x, Wedbush maintains a bullish outlook, and a call has been arranged between Musk and Trump aimed at resolving the conflict.

Analysis

Tesla's stock has experienced significant recent pressure, declining nearly 18% in the past week, primarily stemming from a public dispute between CEO Elon Musk and U.S. President Donald Trump, which has escalated concerns regarding potential regulatory challenges for the company. Wedbush analysts characterized this as an unusual development, highlighting the risk of Trump becoming an adversary to Musk's regulatory agenda. This political overhang compounds existing operational scrutiny; Goldman Sachs recently lowered its price target for Tesla to $285 from $295, maintaining a Neutral rating due to anxieties over vehicle delivery volumes and earnings forecasts, with Q2 delivery expectations now between 335,000 and 395,000 vehicles. This concern is substantiated by sales data showing a 36.2% drop in Tesla's German sales in May, starkly contrasting with the overall German EV market's 44.9% increase, and a 15% year-on-year decrease in May shipments in China, despite a modest 5.5% month-over-month rise. Oppenheimer also holds a Perform rating, citing challenges with Tesla's autonomy platform and political headwinds for renewable energy. Despite these headwinds and a high P/E ratio of 145x, InvestingPro data indicates a "GOOD" financial health score for Tesla. Furthermore, Wedbush remains bullish, positing that the shares are oversold and emphasizing a $1 trillion valuation for Tesla's future in autonomous technology, with some optimism tied to a reported upcoming call between Musk and Trump aimed at reconciliation.

Key Decisions for Investors

• Investors should closely monitor any developments from the reported communication between Elon Musk and Donald Trump, as a resolution could alleviate immediate political overhang and associated stock volatility.
• Given analyst concerns and reported sales declines in key markets like Germany and China, upcoming Q2 delivery figures and subsequent earnings reports are critical data points to assess the extent of operational challenges versus the company's growth trajectory.
• Evaluate the current high P/E ratio of 145x and mixed analyst sentiment against the long-term potential, particularly in autonomous technology as highlighted by Wedbush, while considering the impact of ongoing delivery performance and competitive dynamics in the EV sector.