No matter what happens to electric vehicle manufacturer Tesla (NASDAQ:TSLA), there will always be some eternal optimists, it seems. For months, they’ve been waiting for Tesla stock to stage a spectacular rally. However, we’re assigning the stock a “D” grade as the outlook isn’t great for Tesla.
A Barron’s report listed some of Tesla’s legal problems. They include “CEO Elon Musk’s 2018 pay package, employee-discrimination cases, and class-action lawsuits, among others.”
In case that’s not enough for Tesla’s shareholders to worry about, we identified other issues that could weigh on Tesla stock for a while. Not to be the bearer of bad news, but a reality check is overdue for the perma-bulls who can only see the glass as half-full for Tesla.
Tesla Stock Underwhelms Amid Tough EV Market
It really shouldn’t be too surprising if Tesla gets kicked out of the Magnificent Seven club. Or, when a new top-stocks club comes along, Tesla might not be invited.
Among other headwinds, a tough EV market has weighed heavily on Tesla stock this year. On that topic, a new research report from J.D. Power found that interest in EVs among U.S. consumers declined for the first time in three years.
24% of research-study respondents were “very likely” to consider buying an EV, versus 26% in the year-earlier study. During that same time frame, the portion of respondents who were “overall likely” to consider buying an EV fell from 61% to 58%.
Recently, we discussed the unfortunate news of Tesla laying off large numbers of workers. Unless there’s a miraculous recovery in U.S. EV demand, investors shouldn’t be very shocked if the wave of Tesla layoffs continues.
Tesla Is in Damage-Control Mode
There’s still more alarming news, as Reuters reported that Tesla is implementing a “damage-control campaign.” Apparently, Tesla drew the ire of some European leasing companies but now seeks to regain their favor.
It may be too late to repair these broken business relationships. One can’t blame the automaker’s European leasing partners for being unhappy, as Tesla’s “repeated retail price cuts tanked their fleets’ value and its slow service and expensive repairs alienated their corporate customers.”
Thus, we’re seeing soft EV demand hindering Tesla in the U.S. and leasing-company issues besetting Tesla abroad. The timing couldn’t be any worse for Tesla, especially after the company’s first-quarter 2024 8.5% decline in global EV deliveries.
Tesla Stock: Prepare for Choppy Price Action
Don’t get the wrong idea. We’re not Tesla haters, by any means, and we’re not predicting a share-price crash. However, today we’re delivering a reality check time to the Tesla perma-bulls.
With the aforementioned headwinds in effect, it’s entirely possible that Tesla stock will chop around for a while. The stock gets a “D” grade, which is subject to change at a later time. Yet, the risk-to-reward balance isn’t favorable and there’s no urgent need to invest in Tesla now.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
