After Another Downgrade, Tesla's Popularity Wanes On Wall Street

Tesla TSLA +1.79% stock was incredibly well-liked by Wall Street just a few days ago. Analysts are now less certain.

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Shares of Tesla (ticker: TSLA) were downgraded on Monday by Rod Lache of Wolfe Research from Buy to Hold. He currently has no price objective for Tesla shares. His previous share price objective was $185.

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Lache is growing slightly more concerned about the possibility that declining macroeconomic conditions could affect the sale of automobiles. According to Chris Senyek, chief investment strategist at Wolfe Research, rising car loan delinquencies are one warning that future US consumer spending may be worse.

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Share prices have been slightly impacted by the downgrading to start the week. In premarket trade, Tesla stock is down approximately 0.5% at $172.54. Futures for S&P 500SPX +0.65% are unchanged. Futures for the Nasdaq CompositeCOMP +1.32% are up 0.5%.

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It represents the second downgrading in recent days. Tuesday night, Adrian Yanoshik of Berenberg cut Tesla stock from Buy to Hold. However, he increased his share price estimate from $200 to $210.

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As Tesla stock overreacted to price reductions early in the year, Yanoshik's downgrading centered around valuation and taking a profit.

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As Tesla revealed price reductions in China, its stock price rose to $101.81 on January 6. This year, Tesla has reduced prices many times to increase demand and help more of its models be eligible for fresh tax credits in the United States.

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Investors eventually started to believe the price drops were evidence of Tesla's strength and cost leadership after the initial shock of the early 2023 pricing cuts subsided. Since its low on January 6, Tesla stock has increased by 70% as of Monday's trade.

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According to FactSet, 53% of analysts who follow the firm rank its shares as Buy following the downgrades. The S&P 500's equities have an average Buy-rating ratio of roughly 58%. The typical analyst target price for the stock is $198 per share.

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Over 66% of analysts that follow Tesla stock rated the stock as Buy in the middle of February. That was as well-liked by investors as Tesla stock has been since 2012, when 67% of analysts who cover the firm rated the stock as Buy.

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It was a totally different era back then. The price of Tesla stock was at $10, it had a market value of about $3 billion, and 10 analysts were following the stock. With a market worth of around $540 billion, Tesla is the most valuable automaker on the planet today and is covered by more than 40 analysts.

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After Tesla shares topped $200, putting them up over 100% from the January 52-week low and about 60% year to date, downgrades gained some traction.

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With premarket trades included, Tesla stock has now increased by roughly 40% year to date.

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In early April, Tesla will announce first quarter deliveries. Wall Street anticipates that in the first quarter, 430,00 units will be sold, up from 405,000 in the final quarter of 2022. This is going to be the next significant Tesla stock catalyst, which has the power to raise or lower shares.