Tesla is undoubtedly one of the most talked-about stocks, and it is always in the headlines for its marvelous innovations or its CEO's pursuits. While Tesla was among the most sought-after stocks in 2024 and early 2025, the recent Q4 earnings release and product developments present mixed signals for investors. Tesla has experienced extreme volatility, a sharp 50% decline from its all-time high in December 2024. Tesla Inc. (NASDAQ: TSLA) experienced a greater dip on March 10, 2025, when shares plunged by 15% in a single trading session. Tesla closed the day at $222.15, its lowest point since October. This also signaled that the company's value had nearly become half of what it was at its highest in December 2024.

Tesla’s stock price has since rebounded to $242. If you are looking to buy Tesla stock, then many factors need to be analyzed to understand the intricacies behind such price movements and whether Tesla should be bought by investors right now.

Recent Stock Performance and Market Conditions

When we look at the bigger picture, it is not only Tesla's stock facing a decline, but macroeconomic uncertainty has pushed the broader market into a complete downturn. On March 10, 2025, the Dow Jones Industrial Average fell by more than 2%, and even the Nasdaq suffered a 4% drop. The brunt of the market was also felt by Tesla when its stock plunged nearly 15%, and this single-day loss made it one of the worst-performing stocks in the market. When the year-to-date data is analyzed, Tesla's stock has plummeted by 45%, becoming the poorest-performing stock even in the S&P 500 this year.

Though the market has its effects, the brunt being faced brutally by Tesla is also backed by reasons exclusive to Tesla Inc. This sharp decline has been attributed to various factors, primarily its CEO's political involvement and new role as chief of the U.S. Department of Government Efficiency (DOGE). The stock's decline can be related to reports of Elon Musk's political activities, such as reports of plans for reductions in the U.S. government workforce. Elon Musk's high political involvement in the Trump administration in the U.S. has led to dissatisfaction among its European customer base. It has also reportedly declined, with orders in Germany dropping by 70%, and a survey of over 10,000 Germans said they won't buy a Tesla. Moreover, shipments in China also fell by nearly 49%, raising further concerns about Tesla Inc.'s declining sales.

Operational Challenges and Increasing Market Competition

Tesla has been a pioneer in the electric vehicle (EV) segment globally, but recent operational challenges have challenged its position in maintaining dominance in the EV market. The company's delivery numbers fell short of the predicted numbers in 2024, and the decline in sales for Tesla, particularly in the European market, is expected to cause a more significant downturn in 2025. Tesla's ambitious robotaxi project is experiencing delays, raising concerns among investors about Tesla's ability to execute ambitious projects successfully. The highly anticipated Cybertruck, which was expected to contribute significantly to Tesla's revenue, also failed to achieve the desired profits, worsening profit margins.

While operational challenges are becoming a big hurdle, the EV market is also seeing many emerging players, rather than established players in the automobile industry, dive into the EV segment, making the landscape highly competitive for Tesla, Inc. In China, OG automobile companies like BYD and NIO are expanding their market share rapidly. Moreover, the dissent in Europe's customer base against Elon Musk's political endeavors has opened doors for European automobile players to ramp up their EV production.

If such a scenario continues, Tesla, the once-flag bearer of the EV market, is expected to become another name in the global EV segment.

Financial Performance, Valuation, and Investors' Sentiments

Tesla's financial performance has also been concerning for investors as it shows signs of strain. As stated in its Q4 earnings release, its operating income declined 23% year-over-year, and its net income dropped 71% from a year earlier. Moreover, the operating margin for the quarter came in at 6.2%, compared to 8.2% last year.

Regarding the valuation of Tesla stock, it is one of the most overvalued stocks where optimistic models showcase Tesla's forward PE ratio is nearly nine times the average of its next 25 industry counterparts. These figures lead to a market capitalization, which sometimes becomes too unrealistic to believe. BYD, unlike Tesla, is significantly growing in the gas-electric hybrid segment, where its total 2024 sales stood at 4.2 million units, which was more than double Tesla's deliveries. Yet, BYD's market capitalization is not even one-sixth of Tesla's.

Every financial metric and calculation enables investors to make decisions about a particular stock, but the sentiment that backs that decision overpowers the mind. Investors have been concerned with Elon Musk's growing political and social involvements, and some institutional investors have even expressed their distress over Musk's divided attention and hinting towards his shift to recenter efforts and undivided attention on Tesla's growth.

Technological Innovations and Future Prospects

Though Tesla Inc. is not experiencing its best period, its innovative capabilities keep it ahead in the automobile industry. Tesla is pushing its boundaries to keep its game up in autonomous driving technology. Experts estimate that the autonomous driving market will grow at a CAGR of 33% over the next 10 years, and that presents an outstanding opportunity for Tesla to continue being the leader in this arena. Tesla's Full Self-Driving (FSD) V13.2 software is progressing remarkably.

Additionally, Tesla's upcoming Model Q is an affordable option aiming to widen its customer base. This model is expected to cost approximately $30,000 after tax credits. This move will not only broaden Tesla's customer base but also increase its revenue and deliveries. Tesla Inc. is also exploring the Asian market and is all set with its operations in India, further expanding its global reach.

Final Verdict

When we look at the current price movement and events happening around Tesla Inc.:

For investors seeking stability: It would be advisable to wait and analyze the situation until Tesla's financials improve and the leadership and management direction becomes clearer.

For long-term investors with a high-risk appetite, Tesla's current dip presents a marvelous opportunity to buy the stock. The company's futuristic plans possess the scope of expansion in the automobile sector, presenting a great opportunity to capitalize on potential returns. Public.com has a target price of $262.17 for Tesla. That’s a potential upside of 8.8%.

Tesla has always been the talk of the market, and investors must carefully consider their vision and risk appetite before making any investment decision related to Tesla stock.

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