Tesla: Time To Take A Breather (Rating Downgrade)

Summary:

• My “Strong Buy” rating on Tesla, Inc. has outperformed the S&P 500 Index by +78.45%, but recent developments prompt a re-evaluation of bullish views.
• A slower pace of rate cuts implied by the Fed’s latest Dot Plot can pose a heavier penalty on long-duration growth stocks such as TSLA.
• Tesla has started to cut prices again on the Model 3 in the US. Further pricing cuts to combat volume pressures arising from buyer affordability challenges are a key risk.
• TSLA stock is 75% pricier now than it was in early Nov ’24. The recent rally is driven almost exclusively by a re-rating hype at flattish earnings expectations.
• Technicals relative to the S&P 500 have reached a key zone of resistance and shown an initial rejection, thus curbing the chances of continued upside.

Performance Assessment

My ‘Strong Buy’ view on Tesla, Inc. (NASDAQ:TSLA) has played extremely well, outperforming the S&P 500 (SPY, SPX, IVV, VOO) by +78.45% since the last update:

Thesis

Recent news events and

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VOO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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