Wells Fargo Raised Its Tesla Stock Target, But Still Sees A 67% Drop

What Happened

A Higher Tesla Stock Target That Still Says Sell

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Each of those firms nudged its target higher ahead of the July 22 earnings, yet none flipped to a buy.

Market Context

Wells Fargo just raised its price target on Tesla stock (NASDAQ: TSLA), yet told clients to keep selling. The bank now values the shares at $130, still far below the roughly $396 where they trade.

The takeaway is simple. Even with the higher target, that $130 call still points to a roughly 67% drop, because the price already banks on a future the business has not delivered yet.

Langan is also the most bearish voice on the stock. Most rivals, by contrast, sit at hold, with Barclays at $370 (still down from the current level), Jefferies at $400, and Morgan Stanley at $417, as several banks lifted their price targets into earnings. That still leaves Wells Fargo as the clear outlier.

The $5 bump came from volume. Tesla posted a record delivery quarter, about 480,126 cars, roughly 18% above forecasts, so analysts nudged their near-term estimates higher.

Profit is the problem, though. Wells Fargo thinks all those extra cars will barely lift earnings. It expects results roughly in line with forecasts on July 22, because price cuts and higher costs for memory chips, copper, and lithium eat up the gains from selling more cars. In fact, Langan warned that rising input costs could keep squeezing profits even as sales grow.

As a result, the delivery beat earned only a small estimate lift, while the expected margin squeeze keeps fair value far below the price.

Put simply, Tesla is selling more cars than ever, yet earning less on each one. And if today’s profit cannot justify the price, the next question is what can. The sentiment around this has been evident as TSLA is already down almost 10%, year-to-date.

That gap is why the bank can raise its target and still say sell. A slightly better outlook lifts fair value a little, but the price sits so far above it that the risk and reward still point down. The stock is down about 10% this year and trades below its $498 peak, yet still holds one of the richest valuations in the market.

Why It Matters

Analyst Colin Langan lifted his target to $130 from $125 on July 14, while still keeping an Underweight rating, which is Wells Fargo’s version of a sell. From near $396, that $130 target points to about 67% downside. In plain terms, he still expects the stock to fall, just not quite as far as before.

Meanwhile, the tape is not confirming that bet. Chaikin Money Flow (CMF), a gauge of institutional buying versus selling pressure, just turned negative. It is the fourth dip below zero in under two months, which suggests big money stays unconvinced.

The next test comes on July 22, when Tesla reports earnings and offers fresh detail on robotaxi progress. A strong update could flip sentiment fast. Yet, until margins recover, Wells Fargo’s math says Tesla stock is running well ahead of the business behind it.

Details

The debate is about how much downside, not how much upside, which is why Tesla is one of the most closely watched US stocks this month. That stance stands out, because Tesla just posted its best sales quarter ever.

Why Record Deliveries Did Not Change the Call

Meanwhile, it also built 451,758 vehicles and deployed 13.5 gigawatt-hours of energy storage, as the company posted record second-quarter deliveries.

The Valuation Trap and a Weak Tape

At about $396, Tesla trades near 360 times earnings, a level that only makes sense if its robotaxi and self-driving bets pay off. That story, not car sales, is the wider Wall Street thesis now carrying the stock.

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