Tesla Stock Just Got Downgraded by a Major Wall Street Firm. Here’s Why It’s a Warning Sign for Traditional Finance.

A major Wall Street firm just slashed its rating on Tesla stock. The move signals growing skepticism about traditional equity valuations in an era of technological disruption—the kind of disruption crypto was built on.

The Downgrade Details

The firm cited concerns over growth projections and margin pressures. It's a classic Wall Street move: reactive, not predictive. They're looking at quarterly reports while the real innovation happens on a blockchain ledger, not a balance sheet.

Why This Matters Beyond Tesla

This isn't just about one car company. It's about the entire legacy valuation model. Analysts downgrade based on old metrics—supply chains, interest rates, consumer sentiment. They often miss the tectonic shifts driven by decentralized networks and digital asset adoption.

The Crypto Contrast

While traditional finance frets over earnings calls, the crypto ecosystem builds. It bypasses the gatekeepers. No analyst downgrade can halt a decentralized protocol's growth or a community's conviction. Value accrues to the network, not just the shareholder.

The Bottom Line

The Tesla downgrade is a symptom. The diagnosis? A system struggling to price the future. It's another reason capital keeps flowing into digital assets—where the upgrade cycles are software-fast, and the only firm that matters is the consensus of the network. After all, on Wall Street, a 'strong sell' is often just a fancy way of saying 'we missed the top.'

Key Takeaways

• Tesla stock sank Monday after the company got a downgrade from Morgan Stanley analysts
• Morgan Stanley said that the stock faces near-term risks as its EV business struggles, but still has the potential to be a leader in the self-driving software and humanoid robot industries.

The ranks of Tesla (TSLA) bulls have shrunk, as Morgan Stanley downgraded its rating on the company. Shares of the electric vehicle maker fell sharply on Monday. 

"Tesla is a clear global leader in electric vehicles, manufacturing, renewable energy, and real world AI and thus deserving of a premium valuation," analysts led by Andrew Percoco wrote in a note to clients over the weekend. "However, high expectations on the latter have brought the stock closer to fair valuation."

Morgan Stanley lowered its rating on Tesla stock to "equal-weight" from "overweight" previously, while raising their price target to $425 from $410. Telsa shares were down 4% at around $437 in mid-afternoon trading Monday.

Tesla stock faces near-term risks such as potentially falling short of quarterly earnings estimates as its EV business struggles, which could make its next year of trading "choppy," the analysts wrote.

Why This Matters to Investors

Wall Street remains divided on Tesla stock, with the 13 analysts tracked by Visible Alpha split between six "buy," four "hold," and three "sell" ratings. The stock, which has been on a bumpy ride this year, has gained less than 10% so far in 2025, lagging the performance of major stock indexes.

Here's how the analysts value the different elements of Tesla's business:

• EV business: $55 per share, down from $75 previously. The analysts trimmed sales estimates for next year and through 2040, as EV brands in China continue to take market share and as the U.S. adoption of EVs remains uncertain.
• Network services: $145 per share. This comprises Tesla's self-driving software, charging network, and maintenance and service centers, which can grow as the self-driving software improves.
• Energy: $40 per share. This is made up of Tesla's energy storage systems such as batteries and solar panels for home charging, which the analysts say can grow as demand for home energy storage and renewable energy grows.
• Mobility: $125 per share. The analysts expect Tesla to expand its markets where self-driving robotaxis are able to operate next year, estimating that Tesla will have 30,000 robotaxis on the road by 2030.
• Humanoids: $60 per share. While still in the early stages, the analysts say Tesla is "uniquely positioned to be a leader" in the humanoid robot market because of its existing manufacturing abilities and technological advantage.

The analysts also said they expect Tesla will hit seven of the 12 milestones laid out in CEO Elon Musk's recently approved pay package, including the vehicle, Optimus and robotaxi milestones, but only three of the six profitability marks.

Related Education

Tesla shares have gained 8% since the start of the year, but are down 10% from their record high set about a year ago.