Why Tesla Stock Is Falling (2024)

FAQs

Why is Tesla's stock dropping so much? ›

The drop in Tesla stock comes after a California judge refused to dismiss a class-action lawsuit related to Tesla's driver assistance marketing.

Tesla is a Zacks Strong Sell

It has a Zacks Strong Sell recommendation due to the cuts to the earnings estimates. But this is just a short-term recommendation of 1 to 3 months. Some Tesla shareholders have owned the shares for more than 5 years.

Tesla Stock Valuation

Analysts now see 2024 earnings per share targets at $2.44 a share, according to FactSet, down from $3.79 at the end of 2023, $5.62 a share at the end of March 2023 and a whopping $7.07 at the end of 2022. So the forward price-earnings ratio for Tesla stock is 72.8 as of May 5.

The drop has been triggered in part by aggressive EV price cuts, narrowing profit margins and a strategy shift that looks to prioritize self-driving technologies over traditional car production in the coming years.

Tesla is in trouble. Yesterday, the company announced that its profits for the first three months of this year fell by 55 percent from the first three months of 2023. Sales declined by 8.5 percent.

TSLA Stock 12 Month Forecast

Based on 32 Wall Street analysts offering 12 month price targets for Tesla in the last 3 months. The average price target is $172.92 with a high forecast of $310.00 and a low forecast of $22.86. The average price target represents a 1.32% change from the last price of $170.66.

Tesla Stock Price Predictions for 2025

In 2025, #TSLA could range between $22 and $389 per share based on the most bullish and bearish projections. The bullish outlook reflects projections for surging demand in the electric vehicle industry combined with Tesla's dominant positioning and technical edge.

The Tesla stock price prediction for tomorrow is $ 173.02, based on the current market trends. According to the prediction, the price of TSLA stock will increase by 1.38% in the next day.

When CNBC asked what Tesla would be worth in five years, Wood confidently said $2,000 per share. The $2,000 per share figure is not new, either. In April 2023, Ark Invest published its valuation model for Tesla with the same price target and the expectation of reaching it by 2027.

Will Tesla be successful long term? ›

Yes, I remain optimistic about Tesla's long-term growth possibilities and Elon Musk's position at the company. Tesla has demonstrated resilience and innovation in the electric vehicle market, continuously expanding its product lineup, global presence, and technological advancements.

To maintain sales momentum in 2023 in 2024, Tesla has aggressively cut vehicle prices and offered discounts. As a result, auto gross margins, which peaked at 30% in Q4 2021 amid industry chip shortages, have plunged well below 20%.

Another reason to avoid buying Tesla is because of the valuation. Even though shares are currently 56% off their all-time high, they still trade at a steep price-to-earnings ratio of 46.2. This tells me that the market still values Tesla more like a tech enterprise and less like a traditional car company.

Tesla is the world's most valuable auto manufacturer, with a market capitalization of $611 billion. CEO Elon Musk is by far the largest shareholder, with over 20% of the company's equity. Besides Musk, the largest shareholders are asset management companies like BlackRock, Vanguard, and State Street.

Tesla's nightmarish start to the year saw its January earnings reveal significant misses for both sales and profits; a 9% year-over-year decline in first-quarter vehicle deliveries, far short of forecasts of 7% growth; and comes ahead of the company's first batch of 2024 financial results Tuesday, which analysts expect ...

Tesla is slashing prices in the U.S., China and Germany as the electric vehicle maker battles slowing sales and an increasingly competitive market for EVs.

More competition and flagging demand for electric vehicles has led to declining sales at Tesla. As sales of Teslas drop and demand for electric vehicles cools — even as more models enter the market — an increasing number of automakers are competing for a slice of a shrinking pie.

Gigafactory delays disrupt production schedules, while a shrinking workforce struggles to meet demand. Then there's the price war with aggressive Chinese competitors like BYD. Tesla's struggles aren't happening in a vacuum.