Tesla shares fell 3.39% to close at $439.58 on December 8, their steepest drop in a week. The decline followed Morgan Stanley’s decision to downgrade Tesla from “Overweight” to “Neutral” — its first such move since June 2023. In a report, analyst Andrew Percoco noted the stock’s valuation appears high, with market optimism over future growth in AI and robotics likely already priced in. Tesla’s forward P/E ratio stands near 210x, the second highest in the S&P 500. The downgrade reflects growing profit pressure. Tesla’s Q3 2025 revenue rose 12% to $28.1 billion, but net profit fell 37% and operating margin hit a five-year low of 5.8%. Morgan Stanley raised its price target from $410 to $425, assigning about $60 per share to the Optimus business.