Tesla’s stock performance has been volatile, plummeting 44% in 2025 compared to declines in the S&P 500 and Nasdaq Composite of 4% and 9%, respectively. Despite this, Tesla shares have risen 37% over the last 12 months. The significant drop from its all-time highs raises questions about Tesla’s future direction.
NYU’s Aswath Damodaran, known as the ‘Dean of Valuation,’ attributes the sell-off to three factors: softening demand in the electric vehicle (EV) market, competition from Chinese EV manufacturer BYD, and Tesla CEO Elon Musk’s involvement in politics. Damodaran forecasts a share price of $148, indicating a potential 38% decline from current levels.
Damodaran’s analysis highlights Tesla’s challenges in maintaining premium market positioning while facing pricing pressure from competitors like BYD. Additionally, Musk’s time spent on political endeavors has raised concerns about his focus on Tesla’s roadmap.
While Damodaran acknowledges potential catalysts such as autonomous driving software and robotaxis, his projections appear conservative compared to Wall Street estimates. Morgan Stanley and mutual fund manager Ron Baron predict substantial profits from robotaxis by 2040, suggesting long-term upside despite near-term pressures.
— news from The Motley Fool