Without growth, is there still valuation? Wall Street predicts: Revenue will decline! Tesla continues to plummet.

The market seems to have lost its enthusiasm for electric vehicles, and the high growth behind Tesla's high valuation may no longer be sustainable.

In overnight trading, Tesla fell by 4.54% to $169.48, with a market value evaporating by about $25.7 billion (approximately RMB 184.7 billion) in one night, down 32% year-to-date, while the S&P 500 rose by 8.3%.

50 Park Investments founder and CEO Adam Sarhan stated in an interview that currently, the market is voting that they believe Tesla is not worth such a high valuation:

At present, sellers are in control, and the market continues to look for catalysts to boost confidence.

Colin Langan, an analyst at Wells Fargo, stated that Tesla's sales volume will see zero growth this year. By 2025, the situation will worsen, with sales declining. He lowered Tesla's target price from $200 to $120, implying a further drop of around 30%.

Analysis points out that Tesla's core issue lies in its once robust growth capability no longer existing. Despite multiple price cuts to stimulate demand, the results have been minimal, with revenue and profit growth slowing significantly, yet its valuation remains significantly higher than other large growth stocks.

In early January this year, Musk warned that the company's sales growth would significantly slow this year. Since then, investors have become increasingly concerned about Tesla's growth prospects.

Langan wrote in a memo to clients that Tesla is a "growth company without growth." He emphasized that sales in the second half of 2023 only grew by 3% compared to the first half, while prices dropped by 5%.

It is worth noting that despite the sharp drop in Tesla's stock price, its forward price-to-earnings ratio (stock price divided by expected earnings per share) is still around 55 times. In comparison, the average forward P/E ratio of the "Big Seven" is only 31 times.

Langan stated: "Although Tesla is a leader in electric vehicles and battery technology, its performance is poor compared to other companies in the 'Big Seven'."

David Wagner, portfolio manager at Aptus Capital Advisors, said: "For a long time, Tesla has been the market darling. Now, the market's favorite story is artificial intelligence, with ESG taking a back seat. Therefore, the historical valuation premium may no longer be reasonable, especially as future revenue growth and profit margins have slowed."

Goldman Sachs analysts believe that Tesla's main disadvantages include larger-than-expected price cuts in cars, increased competition in electric vehicles, delays in products such as FSD and the third-generation platform. Therefore, while the company has long-term growth potential, it faces significant short-term risks.Morgan Stanley also stated that the imbalance between supply and demand of electric vehicles may bring pressure to Tesla this year.