Tesla Stock Climbs Despite Pulling Guidance, but Is More Downside Ahead?

Core Insights - Tesla's stock has risen approximately 80% over the past year despite a significant decline of over 35% in 2025, even after the company pulled its guidance for the year [1][2] - CEO Elon Musk's commitment to focus more on Tesla rather than his other ventures has contributed to the stock's rally, alongside ongoing discussions about robotaxi and AI ambitions [2] Auto Business Performance - Tesla's core auto business is experiencing severe challenges, with a 13% drop in quarterly deliveries to 336,681 and a 20% decline in auto revenue to $14 billion [4][5] - The decline in Model 3 and Model Y deliveries is also notable, with both models seeing a 13% decrease, while other models dropped by 24% [4] - The company has acknowledged that the decline is not a temporary issue, as it has pulled its full-year guidance due to uncertainties in global trade policies affecting the automotive and energy supply chain [5] Market Context - Despite Tesla's struggles, the overall U.S. EV market saw a 10% increase in deliveries, and global EV sales surged by 29% in the first quarter, indicating that Tesla is losing market share [6][7] - The company's auto sales are declining even as the EV market remains robust, highlighting significant challenges for Tesla [7] Future Prospects and Challenges - Musk has made ambitious promises regarding the rollout of robotaxi services, planning to start in Austin, Texas, with a fleet of 10 to 20 vehicles by June [9] - However, Tesla currently operates at Level 2 automation and would need to achieve Level 4 automation for robotaxis, a significant technological leap that has not been clearly outlined [10][11] - The company faces competition from established players like Alphabet's Waymo, which already leads in the robotaxi space, and Tesla's brand reputation issues may also affect its robotaxi ambitions [12][13] Valuation Concerns - Tesla's stock is trading at a forward price-to-earnings ratio of over 100 based on 2025 estimates, while its profitable U.S. auto peers have multiples below 10, indicating a significant premium valuation [16] - The disconnect between Tesla's valuation and its declining market share and revenue raises concerns about the sustainability of its stock price [16][17]