Tesla Stock's 50% Crash: 1 Metric Suggests More Pain Is Ahead for the Electric Vehicle Giant

Core Viewpoint - Tesla's stock has significantly declined, losing around 50% from its all-time high, while the company faces challenges such as eroding margins and loss of market share globally [1] Group 1: Financial Performance - Tesla's EV deliveries fell by 13% year over year, and revenue decreased by 9%, with only slight support from the energy generation and storage segment [4] - The gross margin dropped to 16.3%, and the operating margin was a mere 2.1%, indicating pressure from rising costs and competition [4] - In Q1, Tesla reported adjusted earnings per share (EPS) of $0.27, which was below the analyst expectation of$0.39, and operating income has been declining since the end of 2022 [10] Group 2: Market Position and Competition - Tesla's market share gains have stalled in key markets including China, North America, and Europe, as competitors are gaining ground [4] - Demand for Tesla vehicles has significantly decreased, with sales being propped up by aggressive price cuts that have negatively impacted profit margins [6] Group 3: Future Outlook and Product Development - Management has delayed providing guidance for the rest of 2025, indicating a lack of optimism about future growth [5] - Tesla plans to introduce a new, more affordable vehicle model in 2025 and aims to increase annual production capacity to 3 million vehicles, despite producing just under 2 million in 2024 [6] - The company is also working on new products like the Cybercab and Optimus Robot, but there is skepticism about their financial impact in the near term [7] Group 4: Valuation Concerns - Tesla's forward price-to-earnings (P/E) ratio is at 95, significantly higher than the market average of 20 to 25, suggesting that the stock is overvalued [11] - The high forward P/E ratio indicates potential further declines for shareholders in the coming years [12]