Tesla is the worst performing stock in the S&P 500. Analysts say it will decline further

New York (CNN) — In its time, Elon Musk’s Tesla represented the future of the automotive industry. Now, the company’s own future is in doubt.

The once-successful electric vehicle maker, once considered part of the so-called Magnificent Seven stocks, is currently the worst performer in the S&P 500 this year, down nearly 32% since January.

The story of Tesla’s fall is well documented. The company has been dogged by safety concerns and recalls, slowing its growth and even forcing it to cut prices. But a new report from Wells Fargo analyst Colin Langan paints a darker picture than previously imagined.

Tesla, he wrote, is a “growth company without growth”.

Langan predicts Tesla’s growth will be flat this year and then decline in 2025 as competition increases, deliveries are disappointing and the embattled car and technology company is forced to cut prices again.

UBS also lowered its forecasts for Tesla on Wednesday. Analysts say concerns are growing as demand for electric vehicles slows and Chinese rivals gain global market share.

Except for Tesla, all the companies in the Magnificent Seven (which also includes Apple, Amazon, Meta, Google, Nvidia and Microsoft) reported double or triple-digit profit growth in the last three months of 2023. Tesla reported a 40% decline in profit compared to last year.

Tesla has been through a terrible storm. The electric vehicle environment is becoming increasingly saturated, while the company’s fundamentals are being questioned. Its share price has fallen 60% from its 2021 all-time high of $407.

But despite the recent price cut, Tesla shares are still very expensive compared to its actual earnings and profits, Langan said. The company’s prior trend of rapid growth is no longer safe and the stock is likely to continue its decline, he said.

Wells Fargo lowered its price target for the stock from $200 to $125, and predicted a 25% decline in value. UBS, for its part, has cut its price target to US$165 from US$225.