Tesla stock (NASDAQ: TSLA) witnessed its stock plunge over 3% in the early market trading on Tuesday.
The latest pullback reverses some of the gains from the previous session and underscores ongoing volatility in the electric vehicle giant’s stock.
The drop in Tesla stock indicates a cautious sentiment among investors amid fluctuating momentum and comes ahead of its highly anticipated third-quarter earnings report next week, during a period marked by mixed technical signals and consolidation near recent highs.
Why is Tesla stock plunging today?
A major reason behind Tesla’s stock pullback on Tuesday is news from General Motors.
GM announced a $1.6 billion charge tied to reorganizing its electric vehicle business, a move that came as EV demand in the US seemed to be slowing.
Naturally, that set off some alarm bells for investors about the EV market as a whole.
The investors started wondering: if GM is seeing trouble, could Tesla be next? Even though Tesla had been riding high recently, with strong earnings and near-record valuations, the market’s mood quickly turned cautious.
Traders started selling off shares, and some technical signals hinted that short-term profit-taking was kicking in too.
Now, all eyes are on Tesla’s upcoming third-quarter earnings. Investors want to see if the company can keep growing despite the shifting EV landscape and rising caution.
The whole situation just shows how sensitive Tesla’s stock is to news from the wider sector and what competitors are doing.
What analysts say?
The recent analyst commentary on Tesla stock has been positive, with analyst raising their price targets and even calling it a ‘must-own’ in the AI era.”
Evercore ISI raised its 1-year price target for Tesla stock to $300 from $235, while maintaining an “In-Line” rating.
This adjustment is part of Evercore’s “two-scenario” valuation framework, which balances a 75% probability of Tesla reaching a $1 trillion valuation against a $400 billion core industrial value.
The price target increase reflects evolving market pricing of Tesla’s call options and highlights a cautious yet optimistic view on the company’s future potential.
Melius Research, led by analyst Rob Wertheimer, initiated coverage on Tesla with a Buy rating and set a $520 price target, signaling strong bullish outlook.
The firm highlighted Tesla’s unique positioning in AI and robotics, especially its robotaxi pathway, as key drivers of material upside potential.
Wertheimer emphasized Tesla’s competitive advantage in combining advanced computing power with manufacturing expertise, enabling rapid innovation.
He noted Tesla’s connection to the “Musk ecosystem,” including xAI, which supports swift expansion in AI infrastructure and data centers.
This coverage suggests significant long-term growth opportunities beyond traditional electric vehicles.
Tesla’s current stock trajectory reflects a perfect combination of near-term caution and long-term opportunity.
While recent volatility underscores investor sensitivity to market shifts and sector challenges, confident analyst upgrades and ambitious price targets highlight the belief in Tesla’s transformative role in AI and autonomous driving.
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