Tesla Faces Demand Crisis as Sales and EPS Decline

Tesla struggles with demand as its sales plunge and EPS drops by 53%. Investors should be cautious ahead of the April 2 report on deliveries, potentially impacting stock behavior.

Date: 21-03-2025

AI Rating: 4

Demand and Sales Decline
Tesla has experienced a significant downturn, with a 1% drop in deliveries in 2024, marking its first annual sales decline since 2011. Furthermore, early 2025 figures reveal a drastic 43% sales decrease in Europe, including notable declines in Germany (70%), Denmark (48%), and Australia (33% to 70%). As a major market, a potential decline in China exacerbates the concern for Tesla's demand.

Earnings Per Share (EPS)
The report indicates that Tesla’s earnings per share have plummeted by 53% compared to 2023, now standing at $2.04. This significant decline highlights the negative impact of lower sales on profitability.

Valuation Concerns
Tesla's price-to-earnings ratio of 110.4 is notably high, making it the most expensive among its tech peers. Given the declining sales and EPS, investors may question the sustainability of its current valuation.

Future Prospects
While Musk is pivoting to new fronts such as autonomous driving and robotics, it is likely that the impact of these initiatives will take time to materialize, meaning Tesla’s financials will continue to be driven by its EV sales in the near term.

Stocks: TSLA