Tesla (NASDAQ:TSLA) has long been a market favorite, but 2025 has been a tough year for the electric vehicle (EV) giant. Tesla stock has plunged nearly 40% year-to-date, weighed down by sluggish sales, growing competition, and CEO Elon Musk’s deepening political entanglements. Despite this, former President Donald Trump has thrown his support behind Tesla, even purchasing a Model S in a high-profile move to counteract boycott calls.
With Tesla’s valuation at more tempered levels, investors are now left wondering: Does this mark a buying opportunity, or is TSLA still too risky?
TSLA Faces Political and Market Challenges
Tesla stock forecast discussions have become increasingly tied to Musk’s political activities. His involvement with Trump’s administration has sparked backlash, leading to protests outside Tesla stores and growing concerns that his politics are damaging the brand. Meanwhile, competition in the EV sector continues to heat up, with companies like BYD (OTC:BYDDY) and Rivian (NASDAQ:RIVN) capturing market share.
Adding to the pressure, Tesla reported underwhelming fourth-quarter results. Revenue for Q4 2024 grew just 2% year-over-year to $25.7 billion, falling short of analyst expectations. More concerning, automotive revenue declined 8% to $19.8 billion, a sign that price cuts across Tesla’s lineup may be eroding profitability.
Valuation: Bargain or Value Trap?
Despite the negative sentiment, Tesla’s stock now trades at 94.3 times forward earnings and 7.92 times sales—below its five-year averages of 116.39x and 11.91x, respectively. For investors who believe in Tesla’s long-term growth, this could present a rare opportunity to buy the stock at a relative discount. However, others see it as a sign that the market is reassessing Tesla’s true value.
Autonomous Driving and Growth Prospects
One potential bright spot in Tesla’s stock forecast is its push into autonomous driving. The company is accelerating the rollout of Full Self-Driving (FSD) software, with plans to introduce an unsupervised FSD option in 2025. Additionally, Tesla is preparing to launch a robotaxi service in select U.S. cities, which could open new revenue streams.
Beyond self-driving, Tesla’s energy and storage division continues to grow, with revenue surging 113% year-over-year. This diversification could help cushion the company from slower EV sales.
Analyst Ratings: A Divided Wall Street
Wall Street remains split on Tesla stock. JPMorgan recently lowered its price target to $120, maintaining an “Underweight” rating, while Guggenheim cut its target to $170, reiterating a “Sell” rating. Analysts cite weakening demand, growing competition, and Musk’s controversial public image as key risks.
Conversely, Wedbush analyst Dan Ives remains bullish, holding a $550 price target with an “Outperform” rating. He argues that Tesla’s leadership in autonomous driving will be a major catalyst, making it a top long-term growth play.
Bottom Line: Should You Buy Tesla Stock?
Tesla stock forecast discussions remain highly polarized. The company is facing short-term challenges, including political backlash, declining EV margins, and increasing competition. However, its advancements in self-driving technology and energy storage could drive long-term growth.
For risk-tolerant investors, TSLA’s recent dip might offer a buying opportunity, but those seeking stability may want to wait for clearer signs of a turnaround.
In the coming months, Tesla’s stock performance will likely hinge on key developments, including delivery numbers, FSD progress, and potential regulatory shifts. If the company can prove its ability to maintain strong margins while expanding its autonomous technology, TSLA could regain investor confidence.
Investors should also keep an eye on global EV demand, as slowing adoption in key markets like China and Europe could further pressure Tesla’s growth. Additionally, macroeconomic factors, including interest rates and consumer spending, may impact the company’s ability to sustain its current valuation. While long-term believers in Tesla’s vision remain optimistic, short-term volatility is almost certain.
Featured Image: Pexels © Craig Adderley
