‘Tesla implodes in 2025', warns Wall Street analyst

Core Viewpoint - A Wall Street analyst has warned that Tesla may face a potential collapse in 2025 due to declining sales and an unsustainable valuation, as the stock struggles to regain the $400 mark [1][2]. Sales Performance - Tesla's sales have significantly dropped, with a 50% year-over-year decline in Europe for January 2025, an 8% decrease in China, and five consecutive quarters of year-over-year declines in California, its largest U.S. market [7][11]. - In Germany, Tesla registrations fell 59.5% year-over-year to just 1,277 in January, despite having its sole European factory located there [9]. Financial Performance - Tesla reported weaker-than-expected Q4 2024 earnings, with revenue rising only 2% to $25.71 billion, missing the forecast of $27.26 billion. Automotive sales fell 8% to $19.8 billion due to lower average selling prices across all major models [11][12]. - Operating income dropped 23% to $1.6 billion, while net income plunged 71% to $2.32 billion, largely due to the absence of a $5.9 billion tax benefit from the previous year [12]. Valuation Concerns - The analyst highlighted Tesla's valuation as "absurdly high," noting it stands at 181 times its projected 2025 non-GAAP earnings per share, implying an unrealistic scenario where Tesla would need to pay 100% of its earnings as dividends for 181 years [10]. Market Dynamics - The current political landscape, particularly with Donald Trump in office, is seen as unfavorable for Tesla, as regulatory shifts could negatively impact the company's core business by moving away from EV subsidies and renewable energy policies [3][5]. - Tesla's key customer base, primarily liberal-leaning Democrats, has distanced itself from Elon Musk due to his political and social stances, which has weakened brand loyalty [4][5]. Future Outlook - Tesla is banking on advancements in full self-driving technology (FSD) and artificial intelligence (AI) to drive future growth, although analysts warn that the stock is already pricing in these advancements despite the lack of tangible products and rising safety concerns [14][15]. - The company recorded a slight year-over-year drop in 2024 deliveries, falling to 1.79 million from 1.8 million in 2023, but maintained a strong daily average of 4,889 shipments, with improvements in quarterly deliveries [13].