Tesla Shares Continue to Slide as Investors Brace for Further Declines

Tesla’s stock has experienced a sharp downturn in recent months, with shares down roughly 40% from their late 2024 high, Bloomberg reports.

The decline, which accelerated following disappointing European sales data, has raised concerns among investors about the electric vehicle (EV) giant’s future performance. As momentum fades, options traders and analysts suggest further losses may be on the horizon.

Tesla’s recent struggles stem from a combination of industry-wide trends and company-specific setbacks. The automaker reported weaker-than-expected fourth-quarter deliveries, marking its first annual sales decline in over a decade. Additionally, its latest earnings report revealed lower-than-anticipated profits and a downgraded sales outlook for 2025.

The broader EV market is also evolving, with increasing competition from rivals like China’s BYD, which has announced plans to integrate advanced driver-assistance features at no extra cost. Meanwhile, concerns about CEO Elon Musk’s focus—particularly his political involvement—have added to investor uncertainty.

Tesla’s stock valuation remains significantly higher than many of its industry peers. Shares currently trade at 92 times forward earnings, compared to 21 times for the S&P 500 and an average of 28 times for other mega-cap companies. This premium has made Tesla particularly vulnerable to shifts in investor sentiment.

As a result, market participants are increasingly positioning themselves for potential further losses. Options data indicates that traders are paying the highest premiums since last August to hedge against additional declines. Additionally, Tesla’s recent drop has coincided with a broader market pullback, with the S&P 500 retreating from record highs.

Chart analysts point to key technical levels that could determine Tesla’s next moves. Mark Newton, head of technical strategy at Fundstrat, believes the stock may find temporary support around $275. However, if it falls below that mark, it could test the $260 level, last seen before the US presidential election.

Despite current challenges, Tesla’s stock has historically shown resilience, capable of rapid rebounds. The company’s post-election rally saw shares nearly double within just 29 trading sessions. However, with few immediate catalysts for growth, some analysts caution that Tesla’s near-term outlook remains uncertain.

As investors weigh the company’s long-term prospects against its current difficulties, Tesla’s trajectory remains a topic of debate. David Mazza, CEO of Roundhill Financial, summed up the conflicting views:

“It’s challenging to say what the right path for the stock is, considering these dueling narratives.”