The Tesla (NASDAQ:TSLA) share price has been on a wild ride. Scratch that. The Tesla share price is a wild ride. Always has been.
Today, the stock’s screeching into reverse. Shares have plunged more than half from their December peak of $488, dragging Tesla’s market-cap down to $740bn.
While that may sound hellish, it’s worth noting that this only takes the stock back to October 2024 levels. Despite the sell-off, the stock’s still up 36% over the past year.
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Is this growth stock running on empty?
At times, Tesla seems overwhelmed by controversy. CEO Elon Musk’s growing political involvement has raised concerns about his focus on the company. Strange salutes and erratic social media behaviour haven’t helped.
But Tesla’s issues go deeper than politics. The company’s core electric vehicle (EV) business is slowing, with weak year-to- date deliveries . It’s just had to recall 46,096 Cybertrucks, which isn’t good.
Competition’s heating up, particularly from Chinese carmakers such as BYD. Its new ‘Super E-Platform’ allows cars to charge in just five minutes for a range of 250 miles. That’s more than twice as fast as Tesla’s Superchargers. Are we facing another DeepSeek moment?
But we need to zoom out a little. Tesla’s more than an EV maker. Its transformation into an artificial intelligence (AI) and robotics powerhouse is gathering pace. It’s blazing a trail in large-scale and residential battery storage. The robotaxi division’s expansion of full self-driving in China and Europe and Optimus robots (which can supposedly handle household chores) all offer new things to get excited about.
Some brokers reckon see recent slippage is a massive opportunity. Cantor Fitzgerald recently upgraded Tesla to Overweight and maintained its beefy $425 price target. That implies a massive 80% upside from today’s $236. Tesla has delivered that kind of growth before.
Oh, but the risks! President Trump’s trade war could go anywhere and it isn’t hard to imagine Beijing retaliating with tariffs on Tesla. Sales are down in Europe as some consumers recoil from the brand.
Another risk is that Trump’s administration scraps the $7,500 EV tax credit. That may seem unlikely, given Trump and Musk are such close allies. But that relationship could prove as volatile as Tesla shares.
The 42 analysts tracking Tesla have produced a median one-year price target of 369p, which suggests a blockbuster 56% gain from today.
A stunning growth opportunity?
But many of these estimates will have been made before the recent sell-off, and with market conditions worsening, they may now be overly optimistic.
Alternatively, they may be alerting us to a brilliant buying opportunity, staring us right in the face. What’s that they say about tuning out the short-term noise?
Tesla’s an ultra-high-risk binary play. Nothing new there. It’s still expensive, with a price-to-earnings ratio of 115. That’s a huge premium to legacy automakers like the Ford Motor Company, which has a P/E of just 6.85. Nothing new there either.
So should investors consider this a buying opportunity? Well, yes. Tesla’s a stunning company that’s suddenly available at a peak-to-trough 50% discount.
It has a history of defying expectations, and while it faces serious challenges, it also has significant growth avenues beyond EVs. This could prove to be a brilliant long-term investment to think about, but strong stomachs are required.
