Guggenheim sees 30% downside in Tesla's stock, as the EV maker is facing weak deliveries data and continued political noise.
Shares of Tesla Inc. were rising again on Wednesday, but investors shouldn't believe the bounce will continue for much longer, for a number of reasons.
At least that's what Guggenheim analyst Ronald Jewsikow wrote in a note to clients. He recommended investors keep selling, as he sees more than 30% downside the electric-vehicle maker's stock from current levels.
Tesla Motors's stock rallied 8% as of midafternoon, enough to make it the S&P 500 index's third-best performer on the day.
It has climbed 11.7% in two days, for its best two-day run since the days immediately after the U.S. presidential election. But keep in mind that the bounce started after it had tumbled 15.4% to close at a five-month low on March 10. And, even with the bounce, the stock has plunged 48.3% since it closed at a record $479.86 on Dec. 17.
Jewsikow reiterated his sell rating on the stock and trimmed his price target to $170 from $175. The new target is 31.5% below current levels.
One reason for the bearishness is that what he's seeing regarding refreshed Model Y demand, such as wait times and remaining, older Model Y inventory, is negative. That leads him to believe upcoming deliveries data is headed for "a sizable miss."
Jewsikow now expects Tesla to report first-quarter deliveries of 358,000 EVs, which compares with the average estimate of Wall Street analysts surveyed by FactSet of 430,000.
He's also bearish because of all the "political noise" surrounding Tesla Chief Executive Elon Musk, given his close ties with President Donald Trump, and his running of the so-called Department of Government Efficiency, which has been slashing jobs and government programs.
That has led to a growing number of protests against Musk and his car company.
"At a minimum these protests are likely having an adverse impact on store traffic, and could be impacting consumers' willingness to buy," Jewsikow wrote. "While the protests could prove fleeting, we believe that protests and partisanship are having an impact on demand, a change from our prior belief that politics were not having an impact on sales."
He's also concerned about declining profitability on the EVs that are sold, as there are signs that consumer demand is becoming more sensitive to price, which labeled demand elasticity.
Jewsikow said the 1.2% increase in prices in the first quarter resulted in a 26% decline in demand, which puts demand elasticity at its worst levels since the EV price wars of 2023.
He is expecting quarterly price cuts of 2% for the rest of 2025 but doesn't believe that will be enough to lead to delivery-volume growth.
There is also concern that one big expected positive catalyst, the launch of a commercial robotaxi fleet in the next few months, will be "underwhelming" in terms of scope.
"While we appreciate excitement around robotaxis, we believe the stock is reaching a breaking point, where numbers start to matter - based on our current model [Tesla] has little room left to reduce price before [free cash flow] flips negative," Jewsikow wrote.