Tesla Stock Soars, Yet UBS Predicts a 48% Decline; Will Musk's Criticism of Trump Prove Effective?

TradingKey - On Tuesday, Eastern Time, Tesla's stock soared by 6.9%, reaching its highest level in three months, which translated into an overnight market value increase of $75.9 billion. 

Elon Musk recently took to social media platform X, declaring his return to a grueling "24/7" work schedule, even sleeping in conference rooms, server rooms, and factories. This statement has bolstered investor confidence in Tesla.

Additionally, market confidence was lifted when U.S. President Trump announced on Sunday, the 25th, a delay in implementing tariffs on the EU, boosting U.S. stocks and driving Tesla’s share price higher.

Ongoing Brand Challenges for Tesla

Despite the recent surge, Tesla faces ongoing brand challenges. A recent UBS survey indicates a declining global market interest in Tesla's brand, reiterating a "sell" rating with a target price of $190, significantly below market expectations. With Tuesday's closing price at $363, Tesla faces a potential 48% downside.

UBS has lowered Tesla’s target price multiple times this year: first to $225 in March, and then to $190 in April. 

Their May 27 report on the 2025 Global Electric Vehicle Consumer Survey highlights declining brand appeal for Tesla in its core markets—China, the U.S., and Europe.

In the U.S., Tesla still holds 48% of the pure electric vehicle market share. However, its preference as a top consumer brand plummeted from 38% last year to 29%, primarily due to market saturation and a limited product lineup. 

In China, the largest EV market globally, Tesla's top brand preference fell from 18% to 14%, overtaken by leading EV companies BYD and newcomer Xiaomi. Meanwhile, in Europe, Tesla's sales dropped 49%, trailing the overall growth of the EV industry and facing fierce competition from BYD. 

The survey also points out Tesla's high pricing for its autonomous driving features, which do not align with consumer willingness to pay.

Musk’s Return and Tesla’s Resurgence

Despite these challenges, Tesla’s shares surged 6.9% on Tuesday, outperforming the S&P and Dow Jones indices. This surge is attributed to Musk's announcement of his "return to work," committing to a 24/7 work schedule, and favorable trends in the broader stock market.

As of Tuesday’s close, Tesla has dropped 16% this year, a decline partly related to Musk's political visibility since Trump took office. Musk has recently stepped back from politics, reducing his involvement with the Department of Government Efficiency (DOGE), and has publicly criticized Trump’s policies.

On the 27th, Musk expressed disappointment in Trump’s tax cuts during a television interview. Musk’s distancing from Trump and refocusing on Tesla may gradually improve the company’s image.

UBS analysts emphasize that while the market continues to anticipate Tesla’s developments in Robotaxi and humanoid robots, its core electric vehicle business faces significant challenges. Particularly, potential federal restrictions on California's ability to set stricter auto emissions standards could threaten Tesla’s revenue from selling regulatory credits to traditional automakers, impacting profitability and cash flow and potentially disrupting its fundamental business model.