Tesla’s stock price has taken a hit, dropping by as much as 8% today, as the company faces pressure to deliver on profit growth expectations. CEO Elon Musk had warned that the stock would suffer if it didn’t show improvement in Q1 2025 earnings, which now seems to be coming true.
The automaker’s valuation has fallen below $1 trillion, and while some point to weak European sales, it’s clear that the market has been expecting a decline. Tesla recently launched a new FSD update in China, but it’s received mixed reviews.
Analysts believe that reduced earnings expectations are the main factor impacting Tesla’s stock, with some predicting a price-to-earnings ratio of 300+ if the company doesn’t deliver more profits. In comparison, other automakers like Toyota trade at a P/E of 7 and tech companies like Meta have a P/E of 40.
Tesla’s CEO Elon Musk has faced criticism for his approach to managing the company, with some calling for him to step down. The company’s stock price is heavily influenced by institutional investors, who may be forced to reduce their exposure if they don’t see improvement. Some analysts expect the stock to continue to fall in the coming weeks as delivery expectations are adjusted.
While Tesla plans to launch a robotaxi fleet in Austin in June, some argue that this strategy is just a “moving of the goal post” and won’t address the company’s underlying issues. As the market adjusts to Tesla’s new earnings expectations, it remains to be seen whether the company can turn things around.
Source: https://electrek.co/2025/02/25/tesla-tsla-stock-is-crashing-like-a-souffle-under-a-sledge-hammer-as-elon-musk-predicted