Investor's Corner

Tesla stock: analyst calls EV maker a ‘growth company with no growth’

Credit: Tesla Asia/X

Tesla (NASDAQ: TSLA) was labeled a “growth company with no growth” by Wells Fargo analyst Colin Langan, who said in a note to investors on Wednesday that he expects a leveling off of sales in 2024 and a drop in 2025.

Tesla stock has felt some pressure over the past two years, but as the company navigates a more competitive sector and deals with some new challengers, it is attempting to fend off the adversity with various strategies.

The automaker is still dominating the U.S. market but is being challenged by domestic companies in both Asia and Europe. This has forced Tesla to pull demand triggers, including price reductions and sales incentive programs to encourage owners to buy a new vehicle.

These strategies have also been adopted in the U.S., in an effort to maintain the dominant market share Tesla has owned for several years.

However, Langan said in his note on Wednesday, which was first seen by Bloomberg, that Tesla is a “growth company with no growth,” while using the sales volumes rose just 3 percent in the second half of last year from the first half. Prices, however, were reduced by 5 percent.

Langan also Tesla stock’s performance compared to others in the Bloomberg Magnificent 7 Price Return Index “screens poorly relative” to its peers.

Wells Fargo lowered its 2024 profit estimate to $2 per share from $2.40. The average expectation across Wall Street is $3.03 a share.

Langan’s note is a direct contradiction from that of Dan Ives, who said in a note to investors this morning that the negative sentiment surrounding Tesla stock is overblown, and that the company will likely rebound due to its play as an AI stock and an EV stock, not just an exclusive of one category.

Disclosure: Joey Klender owns Tesla stock.

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Tesla stock: analyst calls EV maker a ‘growth company with no growth’
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