While Tesla’s stock has been on a wild ride lately, some financial experts are now sounding alarm bells about what could be coming next. The electric car company’s shares have tumbled roughly 25% to 30% so far in 2025, making it one of the worst performers in the S&P 500. That’s quite a fall from grace for a stock that once seemed unstoppable.
Several analysts are predicting even steeper drops ahead. Some have set price targets around $300, which would mean another 30% decline from current levels near $430 to $440. Ross Gerber, a notable investor, thinks Tesla could plunge by as much as 50% this year. That’s like watching your favorite sports team go from championship contenders to last place in one season.
Tesla could face a devastating 50% plunge this year, turning Wall Street darlings into market casualties.
The main concern centers on Tesla’s sky-high valuation. The company trades at a price-to-earnings ratio near 250, which is like paying $250 for something that earns $1. Traditional car companies trade at much lower ratios, making Tesla look expensive by comparison.
Analysts expect earnings to drop considerably, with projections showing a 39% decline in quarterly earnings and a 44% drop for the full year.
Competition in the electric vehicle market has heated up considerably. Tesla no longer has the playground mostly to itself. Other automakers are launching their own electric cars, forcing Tesla to offer discounts and incentives to keep customers interested. This has squeezed profit margins from about 25% down to roughly 18%. Tesla also experienced its first annual decline in electric vehicle sales last year, marking a significant shift for the company. Companies like BYD are expanding rapidly and offering competitive alternatives to Tesla’s lineup.
CEO Elon Musk’s unpredictable behavior adds another layer of uncertainty. His controversial statements and political positions have upset some customers, leading to boycotts. Meanwhile, his long-promised self-driving technology and robotaxis remain largely unfulfilled promises.
Technical trading signals also point to potential weakness ahead, with various resistance levels identified by market watchers.
However, the big question remains whether Wall Street is overreacting to Tesla’s challenges or correctly identifying real problems. Some investors might see these lower prices as buying opportunities, while others view them as warning signs of deeper troubles ahead.
