Tesla Stock Falls Pre-Market On BofA Downgrade, NHTSA Probe: Retail Chatter Spikes

Tesla, Inc. (TSLA) shares slipped over 1.5% in premarket trading on Tuesday following a bearish call on Wall Street and news of a fresh regulatory probe, sparking heightened interest among retail investors.

BofA Securities analyst John Murphy downgraded Tesla from ‘Buy’ to ‘Neutral,’ but raised the stock’s price target to $490 from $400. 

Murphy highlighted that many growth catalysts, particularly around Tesla’s robotaxi, Optimus bot, and energy ventures, are already priced in, leaving limited upside. 

He also cited high execution risk in Tesla’s ambitious ventures.

Adding to the pressure, the U.S. National Highway Traffic Safety Administration (NHTSA) announced an investigation into approximately 2.6 million Tesla vehicles over safety concerns linked to the “Actually Smart Summon” feature. 

The feature, introduced in September, enables users to remotely move their vehicle via a smartphone app. 

The NHTSA’s probe follows one reported crash and media accounts of similar incidents while the feature was in use.

On Stocktwits, Tesla remained a hot topic, ranking among the platform’s top 10 most active tickers. 

While retail sentiment was predominantly ‘bullish’, user opinions varied. 

Some expressed confidence in Tesla’s long-term prospects, predicting a quick recovery to new 52-week highs. 

Others voiced skepticism, arguing that the stock’s valuation is stretched at its $1.3 trillion market cap, with some forecasting a significant correction.

Tesla’s recent rally has been buoyed by optimism around regulatory developments under the incoming Donald Trump administration that could benefit CEO Elon Musk’s ventures, particularly in autonomous driving. 

However, the stock now remains well below its intraday high of $488 hit last month.

Tesla is set to report fourth-quarter earnings on Jan. 29, with analysts expecting adjusted earnings of $0.75 per share on revenue of $27.24 billion. 

As the EV giant navigates regulatory scrutiny and investor sentiment shifts, its performance in the coming weeks will be closely watched by both Wall Street and retail traders.

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