Tesla stock is still a sell after its 40% plunge, UBS warns

Leaning into the bear narrative on Tesla (TSLA).

UBS analyst Joseph Spak reiterated his twelve-month Sell rating on Tesla shares on Monday, voicing considerable concern on the near-term demand outlook for the Model 3 and Model Y. He slashed his price target on Tesla to $225 from $259.

The consensus price target on the Street is $239, according to Yahoo Finance data.

The stock tanked 8% to $242 in early trading alongside a broader hit to markets due to tariff concerns.

“While the long-term story at Tesla has shifted to AI (robo-taxis and humanoid robots) and progress there continues, we believe these are longer dated opportunities that the premium multiple already (more than) considers. Stock is currently trading at 90x P/E on consensus (EPS) estimates for 2025, but again we believe that is too high,” Spak said.

Spak forecasts first quarter deliveries for Tesla to decline 5% year over year and 26% sequentially. His new deliveries estimates is 13% below current consensus estimates.

Listen: How Elon Musk deliveries on big ambitions

The bearish note is the latest dreadful news for the Tesla faithful.

Tesla shares are down 40% year to date and are the worst performing component of the “Magnificent Seven” stocks — which also include Apple (AAPL), Amazon (AMZN), Nvidia (NVDA), Google (GOOG), Microsoft (MSFT), and Meta (META).

The stock fell 28% in February alone versus a modest drop for the S&P 500 (^GSPC). Shares are down 7% in February compared to a 3% decline for the S&P 500.

The weakness in sentiment reflects more than just concern that Elon Musk’s closeness with Trump is turning away buyers around the world (though alleged attacks at Tesla stores are fueling this narrative).

Tesla sold just 26,677 vehicles in China’s market in February, according to data released today by the China Passenger Car Association. The figure marked an 11.16% drop year over year and 20% decline from January.

At the same time, Australia’s Electric Vehicle Council reported that Tesla’s overall sales fell 72% year over year in February.

In the US, prices on used Cybertrucks, Model 3s, Model Ss, Model Ys, and Model Xs continue to drop. Tesla is facing increased EV competition from General Motors (GM) and Ford (F), while some consumers are opting for hybrids.

In the past 90 days, the average price of a Tesla has declined 4%, according to data from CarGurus. The fastest price declines are in Cybertrucks, followed by the Model S.

Meanwhile, new tariffs from the Trump administration stand to raise costs for Tesla and other automakers.

The president has signed two executive orders imposing additional 25% tariffs on steel and aluminum, both key raw materials for autos.

Trump’s new trade war with China doesn’t help either — a 2023 study by Nikkei found that 40% of the suppliers for materials used in Tesla’s batteries are Chinese companies.

Wall Street analysts have begun lowering their sales and profit estimates on Tesla ahead of its late April earnings release.

Compared to 30 days ago, EPS estimates on Tesla for 2025 and 2026 have been cut by 3.4% and 2.6%, respectively, Yahoo Finance data shows.

Despite the stock rout, Tesla and Musk continues to have many supporters on the Street.

Ark Investment founder and Tesla bull Cathie Wood says there’s a lot of “pent-up demand” for Tesla vehicles. The big valuation unlock, in her view, is Tesla releasing robotaxis across the country.

“So I now think they’re going to start seeding every state [with robotaxis] and their Full Self-Driving. According to our calculations, their robotaxi will be safer in the fourth quarter than human drivers are,” Wood told me at a conference two weeks ago.

Wedbush analyst Dan Ives doubled down on his bullish Tesla call last week, saying he is “pounding the table” on the stock.

Said Ives, “The time has come to defend the stock.”

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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