A ‘gut check moment’ is here for Tesla enthusiasts, says Wedbush analyst

Elon Musk departs the U.S. Capitol Building on March 5, 2025. Wedbush analysts say his political ties won’t hurt car sales as much as investors believe.

Investors are missing the real value in Tesla’s stock — and blowing out of proportion the negative impact of Chief Executive Elon Musk’s involvement in politics.

That’s according to a Wedbush team led by analyst Dan Ives, who has the highest 12-month price target for Tesla among analysts of $550 per share and just added the company to their best ideas list.

Tesla’s stock slumped again on Thursday, closing 6% lower at $263.45, and was down 1% in p. The stock has dropped 35% this year.

“This is a gut check moment for Tesla bulls (including ourselves) after this massive selloff in Tesla shares with fears mounting. The bears own the Tesla narrative in the near-term as lackluster sales numbers from Europe, China and the U.S., in January/February along with Musk protest/brand worries have created many concerns,” Ives and his team said in a note to clients. Ives rates Tesla as outperform.

But while the “DOGE/Trump-Musk iron clad partnership has created major brand worries for Tesla,” they estimate less than 5% of Tesla’s global sales are at risk, “despite the global draconian narrative for Musk.”

Sales have been sliding in Europe, notably in Germany where a second-straight month of poor numbers revealed a 76% slump last month. More recently, China, its second-biggest market, saw sales drop 49% in February.

Ives told MarketWatch in an email that they arrived at that 5% at-risk number, “based on our conversations with Tesla dealerships globally and historical retention analysis of a Tesla customer.”

Europe does represent a small portion of Tesla’s revenue exposure — 2.2% for Germany and 1.7% for the U.K., according to FactSet estimates. But the U.S., its biggest market, has also been the scene of anti-Musk and Tesla demonstrations.

Still, Ives and his team are convinced that Musk will “better balance his time between DOGE and Tesla/SpaceX over the course of 2025 and some of these distractions will fade.”

And rather than get knotted up over current tensions around Musk’s political involvement, they said investors should focus on where the real value for shares lies — a massive innovation and technology cycle just getting started for the company. “We believe autonomous and Optimus will represent 90% of the valuation of the Tesla story and create a company with a valuation that exceeds $2 trillion,” they said.

As well as the launch of unsupervised FSD (full self-driving) in Austin this June, the analysts are also counting on a lower cost, sub-$35,000 new model before the summer to drive some pent-up consumer demand.

Also in the more positive corner for Tesla were analysts at TD Cowen, where Itay Michaeli issued a new buy rating and price target of $388 on Tesla after taking over coverage of the stock. TD Cowen had previously rated the stock as hold.

Michaeli said the share pullback was a part of their more positive view on the stock, as well as several potential catalysts they see potentially boosting the stock this year.