Tesla’s stock soared to a new record high following President Trump’s election win, but investors are now facing significant challenges. The company is struggling to grow its electric-vehicle sales, which have been declining since 2024. In fact, Tesla’s EV deliveries shrank by 1% compared to the previous year, marking the first annual decline since its flagship Model S was launched in 2011.
Tesla’s sales plummeted in several key markets, including France, Germany, Sweden, Norway, and Australia. The company is facing stiff competition from low-cost manufacturers like China-based BYD, which sells its Seagull model for $10,000 in the domestic market and plans to enter Europe this year.
Despite the challenges, Tesla’s full-self-driving (FSD) software remains a promising opportunity. Analysts predict that FSD could drive Tesla’s annual revenue to over $1.2 trillion by 2029, representing a staggering 12-fold growth from its 2024 result of $97.6 billion. However, these forecasts are based on the assumption that the Cybercab robotaxi and Optimus humanoid robot will be available for mass production by 2026.
The Optimus robot is expected to generate significant revenue, with Musk predicting it could sell for under $30,000. The value proposition for businesses is clear, as the robot’s cost will be significantly lower than that of a human worker. However, Tesla stock remains wildly expensive, trading at a price-to-earnings ratio (P/E) of 161, which is three times more expensive than Nvidia’s stock.
The company’s EPS plunged by 53% during 2024, making it difficult to justify the enormous premium in Tesla’s valuation right now. With EV sales accounting for 78% of Tesla’s total revenue, the recent decline is a problem because the company’s future potential growth drivers won’t scale up until after 2026.
As a result, investors are bracing for another year of weak earnings in 2025. The stock has already fallen 31% from its all-time high, and even if it plunges by another 50%, its P/E ratio would still be above 80. Significant downside is on the horizon for Tesla stock over the next year or so, making it an attractive long-term buying opportunity for investors who believe in the potential of FSD and Optimus.
Source: https://www.fool.com/investing/2025/02/15/prediction-tesla-stock-could-plunge-another-50-mor