Tesla stock fell—hard—on Thursday after one analyst said he expects shares of the electric-vehicle maker to move lower, and soon. Did we mention he’s a long-term bull?
He made a similar call a year ago—and was right.
Baird analyst Ben Kallo made Tesla a “Bearish Fresh Pick” on Wednesday evening. Baird uses the “Fresh Pick” designation when the broker feels a stock will move up or down soon.
The call and the moves in the overall market weighed on shares. Tesla stock slid 5.6% to $263.45, while the S&P 500 and Dow Jones Industrial Average dropped 1.8% and 1%, respectively.
For Tesla, Kallo believes first-quarter delivery estimates are too high. Wall Street expects the EV maker to deliver between 425,000 and 435,000 cars. That estimate was about 470,000 at the start of the year.
However, early-year regional sales data from China and Europe have been relatively weak, raising fears Tesla will miss delivery estimates.
“Production downtime associated with the Model Y refresh complicates the supply-side of the equation while at the same time, [CEO Elon] Musk’s involvement with the Trump administration adds uncertainty to the demand-side,” wrote Kallo.
It is shaping up to be a very messy quarter. Tesla delivered about 387,000 cars in the first quarter of 2024. Wall Street still expects growth. Kallo isn’t as sure. His new estimate is just under 387,000 cars.
For the full year, Kallo projects just more than two million cars sold, a little higher than Wall Street and up from 1.8 million sold in 2024.
The odd thing about the report is that Kallo still rates shares Buy. He didn’t downgrade the stock. He believes investors should brace for—or wait for—this rough patch to pass.
Rough patch puts it mildly. Coming into Thursday, Tesla stock has fallen about 31% this year.
“We continue to view Tesla as a core holding long term and see the company as the leader in real-world AI, but are bearish near-term through the Q1 delivery report,” added the analyst.
Kallo is a bull for the long run. He did lower his target price to $370 from $440 a share on Wednesday.
Overall, the average analyst price target for Tesla stock is about $374, according to FactSet. About 47% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
Kallo added the “Bearish Fresh Pick” label to Tesla in January 2024, while maintaining his Buy rating. Shares were about $190 a piece. Back then, Kallo believed a Delaware court decision to void Musk’s pay package created an overhang for shares.
His call turned out to be prescient. Kallo removed his “Fresh Bearish Pick” in early April when shares were closer to $170 each, and less than two weeks before the stock hit a 52-week low below $140 on April 22.