Tesla (TSLA) shares remain in focus this morning after new data from Cox Automotive confirmed the automaker’s market share in the U.S. tanked last month to its lowest level since 2017.
According to the automotive services provider, Tesla vehicles made up only 38% of nationwide EV sales in August. In comparison, the giant’s share in the U.S. stood at over 80% at its peak.
Tesla stock has been range-bound over the past four months. Versus its year-to-date low set in April, however, it’s up more than 60% at the time of writing.
The aforementioned Cox Automotive data is concerning for TSLA stock as it signals the company is rapidly ceding its dominance in a market it once monopolized.
Now that legacy automakers and new entrants are gaining ground in the EV space, Tesla could struggle with intensifying competition, waning brand exclusivity, and potential pricing pressure in the months ahead.
Investors may interpret Cox Automotive’s update as a loss of momentum, especially as margins shrink and demand softens.
Since Tesla shares are already priced on future leadership and innovation, losing market share this dramatically undermines the narrative, and invites valuation compression. In short, it’s not just a sales dip, it’s a strategic red flag.
Despite a sharp decline in Tesla’s market share in the U.S., Morgan Stanley’s senior analyst Adam Jonas recommends sticking with the EV stock for the long term.
In his latest note to clients, Jonas argued the recently proposed $1 trillion milestone-based pay plan for Elon Musk will actually prove a “good deal” for shareholders.
“It aligns TSLA’s minority shareholder interest with Musk in a way that incorporates operational, profitability, and value creation milestones while cementing long-term commitment to the firm,” he wrote.
Morgan Stanley’s “Overweight” rating on TSLA shares comes with a price target of $410, signaling potential upside of another 18% from current levels.
Investors are recommended caution in playing Tesla stock since other Wall Street analysts do not agree with Jonas’ bullish view on the EV manufacturer.
The consensus rating on TSLA shares currently sits at “Hold” only with the mean target of roughly $300 indicating potential downside of a little under 15% from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com