Tesla (TSLA) stock has fallen 44% from its 52-week high, and even though shares gained nearly 23% on Wednesday, April 9 on the back of a 90-day pause on “reciprocal” tariffs, the path forward for the electric vehicle marker is far from clear.
A higher-for-longer interest rate environment, then politics, tariffs, and a public fight between CEO Elon Musk and a top advisor to President Donald Trump, have caused many TSLA bulls to turn bearish.
Are skeptics missing a chance to scoop up shares on the dip? Let’s take a look at whether or not this stock is worth buying now.
A ‘Pivotal Moment of Truth’
Wedbush Securities analyst Dan Ives said exactly that about Tesla. He has been a longtime bull, previously holding the Street-high price target of $550. However, he recently slashed that target down to $315. Ives’ rationale is that the brand is “suffering by the day as a political symbol.”
And that’s definitely true. Tesla has lost would-be buyers in the U.S. as Musk leads the Department of Government Efficiency, and Tesla vehicles and showrooms have been vandalism targets. A big portion of its sales are also coming from China and other international markets, and neither the U.S. customer base nor its international base is enthusiastic about Musk’s political alignment.
Tariffs of 125% against Chinese imports stand to only make things worse for TSLA stock.
Could Tesla Be Saved by Elon Musk and Donald Trump?
The Trump administration has been surprisingly dovish so far on EV tax credits.
During his reelection campaign, Trump said that he would end all EV subsidies. So far, that hasn’t entirely materialized, and this is very positive for Tesla. Moreover, tariffs on auto imports put forth by Trump do not affect Tesla as much as legacy automakers, as it manufactures the cars it sells domestically, both in China and in the U.S.
However, Trump’s trade advisor Peter Navarro called Musk “just a car assembler” after Elon Musk pushed for zero tariffs between the U.S. and Europe. This has caused many to think that the Trump administration and Musk are falling out, although the White House press secretary dismissed it by saying “boys will be boys.”
Musk cannot stop sales from tumbling or margins from squeezing. Tariffs will still hit Tesla since “20% to 25%” of its parts come from outside of North America.
Trump could exempt car parts or Tesla itself from tariffs, but this still won’t shield Tesla from a sales slump due to Musk’s politics.
Should You Buy TSLA Stock Now?
Tesla still trades at a massive premium, with its trailing price-earnings ratio at 113.8x. The company must win back consumers at home and abroad, and must navigate tariffs on auto imports and deal with the potential fallout in China. Although it is not impossible, the road ahead will be tough.
As a result, I would rate Tesla a “Sell.”
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
