Wall Street Loves This EV Stock. Here's Why I'm Not Buying
Key Points
Tesla is still Wall Street’s favorite EV stock.
But its high valuation and competition from Chinese EVs could limit its gains.
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Most Wall Street analysts covering Tesla (NASDAQ: TSLA) remain overwhelmingly bullish on the EV leader. Out of the 48 analysts who cover the stock, 43 still rate it as a buy or hold, while only five rate it as an underweight stock or a sell. At $372, Tesla also remains below Wall Street's median price target of $406.50 and its all-time high of $489.88 per share.
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From 2025 to 2028, analysts still expect Tesla's revenue and EPS to grow at CAGRs of 14% and 27%, respectively. That growth should be driven by the expansion of its autonomous Cybercab fleet, the monetization of its full self-driving (FSD) features, the commercialization of its Optimus robots, its energy storage solutions for data centers, and new vehicles.
But I'm still not buying Tesla's stock
Tesla still has plenty of room to grow, but I'm not touching the stock for two reasons. First, President Trump recently said he was open to allowing Chinese EV makers to sell their vehicles in the U.S. as long as they were built in U.S. factories. If that happens, Tesla's margins could crumble as the increased competition reduces its pricing power.
Second, Tesla looks expensive at 14 times this year's sales. Rising interest rates will compress its valuations while making it harder to fund the capital-intensive expansion of its AI and robotics businesses. I'd only consider buying it if it pulls back significantly in the next market crash.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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