Tesla Stock Drops 45% – Analyst Says It’s a ‘Gut Check Moment

Tesla (TSLA) shares have taken a major hit, dropping nearly 11% this week and sinking almost 50% from their record high. The stock, which once peaked at over $479 on December 17, ended Friday’s session at $263—its lowest closing price since early November.

The sharp decline has rattled investors, but longtime Tesla supporter Dan Ives of Wedbush isn’t backing down. Calling this a “gut check moment” for Tesla believers, Ives defended the company’s long-term prospects, maintaining his Outperform rating and a bold $550 price target. He also added Tesla to Wedbush’s “Best Ideas List”, doubling down on his confidence in the stock.

One of the biggest concerns weighing on Tesla’s stock is CEO Elon Musk’s political involvement. Musk’s close ties to former President Donald Trump have led some analysts to warn that his political connections could hurt Tesla’s reputation and investor sentiment. After a 5.7% drop on Thursday, some on Wall Street suggested that Musk’s political controversies were distracting from Tesla’s core business.

Tesla’s stock has also erased nearly all the gains it made after the 2024 election, a period when Musk became a prominent supporter of Trump’s campaign. Despite the decline, Ives insists that these concerns are being blown out of proportion. He argues that Tesla has survived major challenges before—whether it was production struggles in 2017-2018, financial worries, or the chaos surrounding Musk’s Twitter takeover in 2022.

Ives, who has the highest Tesla price target among the 48 Wall Street analysts tracked by Yahoo Finance, remains convinced that the company’s future remains bright. The average analyst target sits at $346 per share, still well above Tesla’s current price.

Adding to the pressure, Tesla suffered its biggest stock decline of the year in February, leading some investors to question its future. However, Ives downplays fears about Musk’s political ventures, estimating that Tesla’s global sales would take at most a 5% hit due to Musk’s ties to Trump. He also expects Musk to shift his focus back to Tesla and SpaceX in 2025, helping to calm investor concerns.

Beyond short-term worries, Ives believes Tesla’s future is still tied to its long-term innovations. He argues that Trump’s administration could create a business-friendly environment that benefits Tesla, particularly in autonomous driving regulations. Ives sees Tesla’s progress in self-driving technology and robotics as a game-changer that could push the company’s valuation beyond $2 trillion, far outweighing current EV demand worries.

For now, Tesla investors face uncertainty, caught between short-term market fears and long-term technological potential. Whether Tesla rebounds or continues to struggle may depend on how quickly Musk refocuses on the company’s core mission.

Also Read: Tesla Stock Falls Nearly 40 Percent as Sales Slow and Elon Musk's Political Moves Raise Concerns