Tesla Drops Over 4% on Wall Street After Morgan Stanley Downgrade
Despite Morgan Stanley’s revision, most analysts still hold a “buy” or “strong buy” rating on Tesla, according to LSEG data.
Quick overview
- Tesla shares dropped approximately 4% following a downgrade from Morgan Stanley, which cited overly optimistic expectations for the company's AI-driven businesses.
- Morgan Stanley set a price target of $425 for Tesla, indicating a potential downside of 6.5% from current trading levels.
- The firm downgraded Tesla from Overweight to Equal-Weight, suggesting the stock will perform in line with the broader market.
- Despite the downgrade, most analysts still maintain a 'buy' or 'strong buy' rating on Tesla, with shares up over 12% this year.
Tesla shares fell sharply on Wall Street this Monday after Morgan Stanley downgraded its rating on the company, citing what it views as overly optimistic expectations for the potential of Tesla’s artificial-intelligence-driven businesses.
Shares of the Elon Musk–led company were down around 4%, trading at $436.31.
As part of the review, the New York–based firm set a $425 price target, implying a potential 6.5% downside from current levels. According to the bank, although Tesla remains a global leader in electric vehicles, energy, and applied AI, its stock is already trading close to what it considers fair value. Morgan Stanley downgraded Tesla from Overweight to Equal-Weight, signaling that it now expects the stock to perform in line with the broader market. The firm had maintained an Overweight rating since September 2023, reflecting prior expectations that the EV maker would outperform peers.
In general, a stock rating reflects analysts’ or agencies’ assessments of a company’s expected performance—whether its shares are likely to rise, fall, or remain stable—based on factors such as growth, earnings, debt levels, and competitive strength. These assessments serve as guidance for investors making portfolio decisions.
Despite Morgan Stanley’s revision, most analysts still hold a “buy” or “strong buy” rating on Tesla, according to LSEG data.
So far this year, Tesla shares are up more than 12%, a gain that nonetheless lags behind the S&P 500 (+16.37%) and the Nasdaq Composite (+21.75%) over the same period.
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