Tesla (TSLA) Stock Dropped 6% Below Target Amid SpaceX Merger Speculation

Key Takeaways

• Tesla’s price target has been reduced to $375 by Jefferies, suggesting approximately 6% potential decline
• Analysts caution that TSLA might transform into an unofficial SpaceX tracking instrument amid merger speculation
• Q1 earnings revealed $0.41 EPS exceeding forecasts while $22.39B revenue fell short of $22.96B expectations
• Upcoming robotaxi and humanoid robot ventures anticipated to generate initial losses according to Jefferies
• Analyst consensus remains neutral at Hold with average target price of $404.37

Tesla (TSLA) shares began Monday trading at $400.49, with Jefferies establishing a revised $375 price objective — representing roughly 6% downside from present valuation — while highlighting an emerging structural risk for investors.

Tesla, Inc., TSLA

Jefferies’ primary concern extends beyond traditional valuation metrics. The investment firm suggests that intensifying market chatter surrounding a potential Tesla-SpaceX combination could transform TSLA shares into a SpaceX performance indicator, disconnecting the stock from Tesla’s core automotive operations.

In the aftermath of the highly anticipated SpaceX (SPCX) IPO, Jefferies observed that emerging merger consensus “may turn TSLA into a tracker as shareholders try to minimize stake dilution.” This represents an unconventional risk profile compared to typical quarterly performance concerns.

Should this narrative gain traction, Tesla’s market valuation could become detached from its fundamental business performance — creating complexity for investors attempting to assess the electric vehicle operations independently.

Jefferies maintains a direct assessment: “Valuation and estimates remain disconnected.” The brokerage doesn’t anticipate this divergence resolving smoothly in the immediate future.

New Ventures Expected to Generate Initial Losses

A significant component of Jefferies’ conservative outlook stems from its interpretation of Tesla’s emerging growth initiatives. The firm anticipates below-consensus performance, projecting that robotaxi services and humanoid robotics programs will initially drain profitability rather than contribute to it.

This represents a more cautious perspective than many Street analysts, who have been incorporating revenue acceleration assumptions from these ventures. Jefferies acknowledges the long-term opportunity while emphasizing that markets are overlooking the capital-intensive development period ahead.

Tesla’s first-quarter performance delivered contrasting signals. Earnings per share reached $0.41, surpassing the $0.39 analyst forecast. However, quarterly revenue totaling $22.39 billion missed the $22.96 billion Street estimate. Year-over-year revenue expanded 15.8%, while the company maintains a 3.95% net profit margin.

European FSD Expansion Faces Regulatory Headwinds

Regarding regulatory developments, Tesla secured supervised Full Self-Driving approval in Denmark — representing incremental progress. However, Swedish authorities may require modifications to the system’s speed limit protocols before permitting deployment.

This uncertainty surrounding European FSD expansion constrains near-term software revenue opportunities across the region.

Insider trading activity has shown divergent patterns. CFO Vaibhav Taneja divested approximately $1.05 million in shares during early June, with the transaction linked to tax liabilities from equity compensation vesting. Director Kathleen Wilson-Thompson sold nearly $10 million worth of shares in late April through a predetermined trading arrangement.

Conversely, Elon Musk exercised stock options that elevated his Tesla ownership to 19.9%, while ARK Invest expanded its holdings.

Westmount Partners expanded its Tesla position by 61.9% during Q1, acquiring an additional 2,719 shares. Institutional ownership currently represents 66.20% of outstanding shares.

The Street’s aggregate rating stands at Hold. Among 45 tracked analysts, 21 recommend Buy, 19 advise Hold, and 5 suggest Sell. The average price objective sits at $404.37.

Tesla trades within a 52-week band of $288.77 to $498.83. The stock carries a PE multiple of 367.42, supporting a $1.50 trillion market capitalization.