June 11 – Tesla (NASDAQ:TSLA) may be heading for a steep decline, with Wells Fargo warning of a potential 63% drop in the stock as second-quarter delivery trends weaken.

The firm maintained its “Sell“ rating and flagged persistent challenges across Tesla’s major markets, including North America, Europe and China. Analyst Colin Langan said global deliveries in May were down about 23% year over year, with the quarter-to-date figure tracking 21% lower than the same period in 2024.

European performance stood out as the weakest, with deliveries in the region falling 42% from a year ago and down 37% year to date. North America also showed a year-over-year decline of 13% for the quarter so far.

Wells Fargo added that Tesla’s pricing remains under pressure despite sticker prices holding steady, as financing incentives have become more aggressive. The firm suggested these discounts, coupled with weakening operating leverage, could weigh on Tesla’s Q2 margins.

The note comes as broader EV demand shows signs of slowing and competitive pressures build globally. Langan characterized Q2 as shaping up to be another poor quarter, casting doubt on the stock’s high valuation.

This article first appeared on GuruFocus.