Wells keeps $125 target on Tesla, says fundamentals are weak

Wells Fargo reiterates an Underweight rating on Tesla (TSLA) with a $125 price target heading into 2025. The stock closed Tuesday down 2% to $396.36. Tesla shares rose 63% in 2024 but the company’s fundamentals are weak and Inflation Reduction Act repeal is a “material risk” to demand and margins in 2025, the analyst tells investors in a research note. The firm believes investors should be cautious the company retaining over $700B in CyberCab and Optimus value. Wells expects the negative Model 3 and Y sales trend to continue in 2025 given diminishing returns from price cuts, the likely U.S. repeal of tax credits for clean vehicles, continued China competition, and cannibalization from “Model 2.5.” The firm doubts the Model Y refresh and the new launches will be enough to “offset this negative trend.”