Brace for Impact: Tesla Stock May Plunge 50% or More in Coming Months

"Prepare for a 50% Drop in Tesla Stock Soon"

Tesla's stock surged post-Trump's election, but declining EV sales and high valuations suggest a potential 50% drop in the next year.

Rachel Patel15 February 2025Last Update : 9 hours ago

Prediction: Tesla Stock Could Plunge by Another 50% (or More)

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Tesla’s stock has experienced significant fluctuations, recently falling 31% from its record high in December 2023. Investors are concerned about declining electric vehicle (EV) sales and increasing competition in the market, which may lead to further drops in stock value.

6 Key Takeaways

Tesla stock reached record highs post-Trump election.
EV sales declined for the first time ever.
FSD and Cybercab present long-term growth potential.
Tesla's P/E ratio significantly higher than peers.
Market competition from low-cost EV manufacturers increasing.
Potential 50% drop in stock predicted.

Fast Answer: Tesla’s stock has dropped 31% since its December 2023 peak, driven by a 1% decline in EV deliveries in 2024. Analysts predict a potential 50% further decrease due to high valuations and competition, despite long-term growth prospects from its FSD software and Optimus robot.

Tesla’s electric vehicle sales have faced a downturn, with deliveries declining for the first time since the launch of the Model S in 2011. In 2024, the company delivered 1.8 million cars, a 38% increase from 2022, but this growth fell short of the 50% annual target set by CEO Elon Musk. The early signs of 2025 show a troubling trend, with significant year-over-year sales drops in key markets like France (63%), Germany (60%), Sweden (44%), and Norway (38%). This decline raises concerns about Tesla’s market share as overall EV sales in Germany increased by 53% during the same period.

Despite the challenges, Tesla is banking on its Full Self-Driving (FSD) software and the upcoming Cybercab robotaxi to drive future revenue. Analysts estimate that autonomous ride-hailing could generate over $1.2 trillion annually by 2029. Additionally, the Optimus humanoid robot is expected to have a vast range of applications, potentially generating $10 trillion in sales over the long term. However, both innovations are not expected to significantly impact Tesla’s financials until after 2026.

Currently, Tesla’s stock is trading at a price-to-earnings (P/E) ratio of 161, significantly higher than the Nasdaq 100’s average of 33.6. This valuation raises concerns among investors, especially as Tesla’s earnings per share (EPS) grew by only 53% in 2024. If the stock were to drop by another 50%, it would still reflect a P/E ratio above 80, indicating that the market may be overvaluing the company given its current sales challenges.

Notice: Canadian investors should be aware of the potential volatility in Tesla’s stock, especially as the company faces increasing competition in the EV market and fluctuating sales figures. Monitoring these Trends may be crucial for investment decisions.

In summary, Tesla’s stock is under pressure due to declining EV sales and high valuations. While there are long-term growth opportunities with FSD and the Optimus robot, the immediate outlook suggests that investors may face further declines in stock value in the coming year.