What happened

Tesla (NASDAQ:TSLA) stock has had an incredible run this year -- up 376% through Friday's close -- but even the best electric cars need to pause and recharge eventually. What's interesting about today's sell-off is that it's coming at a very strange time.

This morning, investment bank Wedbush announced it is raising its bull case price target on Tesla stock from $2,500 a share to $3,500, reports TheFly.com. And Tesla stock is down 2.5% on that news (as of 11:20 a.m. EDT)? Why?

A man examines a stock chart superimposed on a Chinese flag.

Image source: Getty Images.

So what

Perhaps it's because Wedbush's latest prediction of Tesla's stock price value seems a bit ... greedy. I mean, Tesla has trounced the stock market's performance pretty soundly, right? It has basically quintupled this year, and it's up more than eightfold over the past 52 weeks, versus an S&P 500 gain of barely 18%.

On top of that run, Wedbush's prediction of a potential $2,500 stock price already looked pretty ambitious. With the stock trading at $2,050 at the end of last week, a run to $2,500 would work out to 22% one-year growth. But that wasn't good enough for Wedbush.

Oh, no. It had to up its prediction to $3,500.

Now what

Or did it?

Consider: Calling for Tesla stock to shoot up another 71% on the back of "robust and stronger than expected" demand would seem a bit irrationally exuberant in light of last week's news that registrations of Chinese-built Teslas fell 24% in July. Predicting a "perfect storm of demand" when demand just declined would seem to fly in the face of reality.

But here's the thing you may have missed: Wedbush called its $3,500 target a "bull case" scenario -- the number Tesla stock might hit if literally everything goes right for the company. The analyst notes that a more realistic valuation for Tesla -- somewhere between the bull and bear cases, where a couple of things might go wrong -- is still just $1,900 a share, or 7% below where Tesla was trading Friday.

I suspect it's this cautionary note that is reining in investor enthusiasm for Tesla stock today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.