Tesla Faces Major Decline as EV Sales Plummet

Investors are on edge as Tesla stock hits record highs due to political speculation, but the company's dwindling EV sales and soaring P/E ratio signal potential downturn. With demand for electric vehicles crashing, is the stock headed for a 70% drop?

Date: 30-05-2025

AI Rating: 4

Earnings Per Share (EPS) for Tesla has taken a significant hit, plunging by 71% in the first quarter of 2025, a stark contrast to the EPS growth seen in its major competitor companies like Microsoft, Apple, Nvidia, Amazon, and Alphabet. Tesla's resilience is undermined by the fact that approximately 72% of its revenue still derives from EV sales, which are currently witnessing a concerning decline. Despite Tesla's lofty ambitions for its Cybercab and Optimus humanoid robot, the dependency on a shrinking EV segment poses a serious risk to future profitability. Revenue Growth metrics show that Tesla deliveries fell by 1% in 2024 and even more alarming, evidenced by a 20% anticipated decline in Q2 2025, indicating that demand for its vehicles is not just plateauing, but possibly collapsing. Additionally, the company's exorbitant price-to-earnings (P/E) ratio of 186.5 raises red flags among investors, especially when compared to the average of 32.2 for other large tech firms. Should Tesla's stock price adjust to align with industry standards, a decrease of approximately 76% could be necessary just to compete effectively within this sector. This paints a sobering picture of the company's current plight caused by a confluence of shrinking sales, exorbitant valuations, and aggressive competition from players like BYD. Consequently, Tesla's financial position may prompt a strategic reassessment among investors as the promise of future innovations may take years to yield tangible results.

Stocks: TSLA