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Tesla Shares Plunge After Downgrade

  //stocks-investing.news-articles.net/content/2026/01/20/tesla-shares-plunge-after-downgrade.html
  Published in Stocks and Investing on Tuesday, January 20th 2026 at 15:52 GMT by TheStreet.com
      Locale: UNITED STATES, CHINA, GERMANY

Tuesday, January 20th, 2026 - Tesla (TSLA) shares are experiencing renewed volatility following a stark downgrade from veteran analyst Steve Weiss, founder of Short Seller Research. The downgrade, accompanied by a significantly reduced price target, has ignited anxieties within the investment community and prompts a closer examination of Tesla's current trajectory.

Weiss, previously maintaining a $200 price target for Tesla, has now slashed it to $100. This substantial reduction - a 50% decrease - underscores a considerable shift in his assessment of the company's future value. While Tesla has weathered market fluctuations and competitive pressures in the past, this downgrade represents a significant challenge, particularly given the current broader economic climate.

The Concerns Driving the Decision

The analyst's rationale for the downgrade centers around two primary and increasingly pressing concerns: a discernible slowdown in consumer demand for Tesla vehicles and the growing absorption of CEO Elon Musk's time and resources by his artificial intelligence venture, xAI.

"The evidence points to a softening in demand, and it's undeniable that Elon's commitment is largely tied up with xAI," Weiss stated in a recent media appearance. This dual-focus poses a challenge for Tesla, as it struggles to maintain its momentum in the rapidly evolving electric vehicle market.

While Musk's ambition to innovate in the AI space is widely recognized, critics argue that it's diverting critical attention and resources away from Tesla's core business. Reports suggest Tesla's operational structure has undergone adjustments to accommodate Musk's involvement with xAI, leading some to believe that the company's focus is being diluted. These adjustments include restructuring project teams and shifting resources to AI development, potentially impacting the production and delivery of electric vehicles.

The timing of this downgrade is particularly noteworthy. Tesla has already been navigating a challenging environment marked by production cuts aimed at managing inventory levels and price reductions implemented to incentivize sales. These measures, while intended to stimulate demand, are often interpreted by investors as signs of underlying weakness. Rising interest rates, which increase the cost of borrowing for both consumers and businesses, are also contributing to the pressure on Tesla's stock.

Furthermore, the electric vehicle market is becoming increasingly competitive. Legacy automakers are investing heavily in electric vehicle development, and new EV startups are emerging, all vying for market share. This increased competition is putting downward pressure on prices and margins, further complicating Tesla's path to profitability.

Investor Response and Potential Next Steps

Weiss's recommendation isn't subtle: he advises investors to seriously consider selling their Tesla shares. The rationale behind this directive is that the current stock price remains inflated, and his revised price target accurately reflects the assessed intrinsic value of the company given the prevailing conditions.

Tesla's response to this latest challenge remains to be seen. The company's leadership will likely face increased scrutiny and pressure to articulate a clear strategy for addressing these concerns and restoring investor confidence. Potential measures could include a renewed emphasis on cost-cutting, further innovation in battery technology to improve vehicle range and affordability, or a public reassessment of Musk's role and responsibilities within the company.

It is crucial for investors to analyze these developments carefully and consider their own risk tolerance before making any investment decisions. While Tesla remains a pioneering force in the electric vehicle industry, the current headwinds suggest a period of increased volatility and uncertainty ahead.