Tesla stock tumbled Tuesday as reports emerged late Monday that an investor group, headed by Tesla Chief Executive Elon Musk, launched an unsolicited takeover bid worth $97.4 billion for Sam Altman's OpenAI, the artificial intelligence leader.
Oppenheimer analysts on Tuesday called Musk's bid for OpenAI "a distraction from TSLA's challenges" as the research firm kept a perform (neutral) rating on Tesla stock. Oppenheimer said Musk's offer represented a 38% discount to OpenAI's October 2024 capital raise and was unlikely to lead to any meaningful discussions.
Wedbush Securities analyst Dan Ives, a longtime Tesla bull, wrote Tuesday that the bid is just the latest in the feud between Musk and Altman.
"The AI Arms Race is heating up in Big Tech and OpenAI has a very strong market position which poses a risk to other tech players including Musk. We would expect the OpenAI Board to formally reject this bid and continue its capital-raising process although the Musk-led bid is a fly in the ointment for Altman and OpenAI," Ives wrote.
TSLA on Wednesday jumped 2.4% to 336.51, hitting an intraday high of 346.40, during stock market action. The stock retreated from that high as reports emerged late Wednesday that Chief Executive Elon Musk plans to spend the next four months working at the Department of Government Efficiency, known as DOGE, as he aims to cut $2 trillion from the federal budget.
On Tuesday, Tesla stock sank 6.3% to 328.50, its lowest since late November. The stock sold off last week, and has now broken decisively below a recent consolidation.
Tesla initially rallied after reporting fourth-quarter earnings late on Jan. 29 but has reversed lower.
Tesla Distractions: Musk Front And Center
The Oppenheimer analysts also see "increasing risks" to Tesla estimates as electric vehicle and autonomous vehicle "competition intensifies."
"Even with TSLA meeting its June 2025 timeline for driverless covers in (Texas), we still see TSLA as one of several autonomous technology providers, suggesting competition on price and performance," Oppenheimer analysts wrote Tuesday.
The firm also believes Musk's political activity "risks alienating consumers and employees as the Trump administration tests the limits of its power."
This comes as Stifel analyst Stephen Gengaro on Monday dropped his Tesla stock price target to 474 from 492 while maintaining a buy rating on the shares. Gengaro cited Tesla's Q4 results, uncertainty caused by President Donald Trump and Musk's political involvement with the Trump administration as reasons for the price target cut.
The firm wrote that "Tesla net favorability rating [is] nearing all-time lows," based on its in-house tracking of public opinion of potential Tesla vehicle buyers. Gengaro said this could hurt near-term sales and that the unfavorable view of the brand is likely due to Musk.
Meanwhile, Tesla sales have tumbled in Europe to start 2025, another sign that Musk's increasingly political statements are hurting the brand there as well as in the U.S. Meanwhile, it's possible the recent stock decline reflects an ongoing reevaluation of Tesla's earnings report and conference call, as well as its near-term self-driving targets.
Following Q4 earnings, analysts 2025 profit estimates have been coming down. As of Feb. 12, Tesla's 2025 EPS is expected to come in at $2.93, down 11% from the $3.31 expectation prior to Q4 earnings, according to FactSet. Estimates for 2026 have come down significantly as well. Tesla annual earnings are now not forecast to rise above the 2002 peak of $4.07 per share until 2027, according to FactSet.
Tesla Stock Performance
With Tuesday's decline, Tesla stock now no longer has a valid base and is in a sharp downturn after slipping 10% last week. Shares are now more than 30% below that traditional 488.54 buy point and record high from Dec. 18, according to MarketSurge charts.
Tesla stock has dropped since hitting resistance on Jan. 31 at a downward-sloping trendline. Investors who bought on the Nov. 6 postelection breakout have seen the bulk of a scorching hot 200-point gain disappear — mostly since the end of January.
As a result, the relative strength line for Tesla stock is at a three-month low.
Indexes Still Stuck As Tesla Sells Off; DoorDash Leads Winners Late
Tesla stock ranks third in the 35-stock IBD Auto Manufacturers industry group. The stock has an 80 Composite Rating out of a best-possible 99. Shares also have a 93 Relative Strength Rating and an 83 EPS Rating.
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