Tesla slipped 2% in premarket. Shares gained 7.6% on Wednesday after gaining 3.8% on Tuesday. President Donald Trump’s commitment to buy a Tesla helped push shares higher.
The president felt the need to do something after Tesla stock dropped 15.4% on Monday. Falling first-quarter delivery estimates helped push shares lower. Wall Street’s consensus call for Tesla’s first-quarter sales is about 430,000 cars, according to FactSet, but the latest estimates are closer to 360,000 vehicles. That level would be a big disappointment. Tesla delivered about 387,000 cars in the first quarter of 2024. Investors prefer to see growth.
Why sales are falling is still a debate between bulls and bears. Bulls believe sales growth will resume when Tesla ramps up production of its updated Model Y and after the company launches a new lower-priced model later this year.
The Y changeover has had an impact. In China, Tesla sold just 8,000 Model Ys in February, according to data from Citi analyst Jeff Chung. That’s down from a 2024 monthly average of about 46,000 vehicles. Most of that decline is likely due to changeover.
Bears, on the other hand, believe CEO Elon Musk’s political activities are turning off some buyers across the globe.
“Having covered Tesla for nearly 15 years, we find the investor narrative around the company tends to follow the share price,” wrote Morgan Stanley analyst Adam Jonas in a recent report, adding that in December, investors viewed Tesla as a big AI winner. Now, Elon Musk appears distracted.
To help boost stock sentiment, Jonas is looking for the launch of a self-driving taxi service in Austin in late spring or early summer and a “Robot Day” demonstrating Tesla’s progress using AI computing to make labor-saving humanoid robots.
He rates shares Buy and has a $430 price target. His bear case for Tesla stock is $200 a share. His bull case is $800 a share.
Jonas’ bull case projects 2030 sales of 7 million vehicles with self-driving taxis contributing significantly to earnings. The bear case assumes 2030 sales of 4 million EVs and a much smaller robotaxi business.
“We see scope for the shares to test our $200 bear and our $800 bull case within the next 12 months,” wrote Jonas. In other words, Tesla stock will stay volatile.