Tesla Faces Challenges as Stock Drops Amid Earnings Concerns

Tesla's stock suffers a 42% decline from its highs. The CEO sees potential for profits to rise 1,000%, yet current net income is down to $7 billion. Investors may reconsider this buy-the-dip candidate amid slowing EV growth and market share losses.

Date: 10-03-2025

AI Rating: 4

Stock Performance and Challenges
Tesla (NASDAQ: TSLA) has had a remarkable performance over the last 15 years, but recent events indicate significant challenges ahead. The stock is currently down 42% from its all-time highs set at the end of 2024, marking one of its worst drawdowns in history.

Net Income
The report highlights a notable decline in Tesla's net income, which has dropped to $7 billion from a peak of $15 billion less than two years ago. This decrease raises concerns about the company's profitability, especially as it navigates through a competitive electric vehicle (EV) market.

Gross Margins
In addition to net income, Tesla's gross margin has also taken a hit, showing its lowest level in five years at 17.9%. This is further impacted by management's price cuts aimed at clearing inventory, which could signal trouble in maintaining profitability amidst rising competition.

Market Competition
With increasing competition, especially from companies like BYD in international markets, Tesla's eroding market share is a pressing concern for investors. The report adds that EV deliveries have declined slightly, with 1.79 million vehicles delivered in 2024 compared to 1.81 million in 2023. This stagnation raises further doubts about future revenue growth.

Outlook and Investment Recommendations
Although Elon Musk expresses optimistic projections for profit increases in the coming years, skepticism arises due to the lack of new products hitting the market and the significant challenges Tesla faces in maintaining its competitive edge. The suggestion for investors to avoid the stock currently reflects the prevailing uncertainties regarding Tesla's long-term growth prospects, particularly in the volatile EV sector.

Stocks: TSLA GM