Musk's Political Firestorm Ignites UBS Warning: Tesla "Fundamentally Overvalued" as Shares Plunge

TradingKey - On Monday, UBS analysts pointed out in a report that Tesla’s stock price is "fundamentally overvalued," and they issued a "sell" rating on the stock. The target price was set at $215, more than 30% below the current level of $316.90, making it one of the most bearish views compared to most Wall Street analysts.

The UBS report highlighted several risks facing Tesla’s business, including the potential cancellation of the U.S. government's electric vehicle tax credit. A change in this policy could impact the pricing and market competitiveness of Tesla vehicles, which would negatively affect its business outlook.

Tesla’s CEO, Elon Musk, political activities have also been viewed as a business risk. UBS analysts noted that the CEO might become distracted from company operations, or at the very least, may not remain as focused as investors would prefer. There are concerns that if the ongoing tensions between Musk and Trump escalate further, companies under Musk could face greater risks.

UBS analysts also pointed out that in Q2 2025, Tesla delivered 384,122 vehicles, in line with expectations, but significantly lower than the 443,956 units delivered during the same period last year. Meanwhile, the company's gross margin remains relatively low at 17.66%. Based on these factors, analysts have lowered their earnings forecasts for Tesla’s upcoming quarter.

On Monday, Tesla closed up 1.08% at $316.90, but has fallen over 20% in the past six months. According to TradingKey data, the current average target price from Wall Street analysts stands at $294.807, representing a 5.97% downside from current levels.

(Source: TradingKey)