Tesla Stock Is Crashing Down: Is It Time to Sell?

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The once-mighty Tesla stock is in free fall, with shares down 41% year-to-date and analysts warning of further downside. Despite the steep drop, many experts believe Tesla remains significantly overvalued, making it a risky bet for investors.

While CEO Elon Musk’s leadership once fueled Tesla’s rise, his growing involvement in politics and controversial decision-making have become liabilities. Meanwhile, Tesla’s competitors like BYD are surging ahead, delivering stronger revenue growth and maintaining more stable margins. Investors now face a serious question: should they cut their losses and unload Tesla stock? Based on Tesla’s declining fundamentals, market share losses, and political risks, the answer may be yes.

Tesla’s Growth Advantage Is Gone

Tesla was once the undisputed leader in the EV industry, posting massive revenue growth and dominant operating margins. That’s no longer the case. The company’s deliveries and production have stagnated, and its vehicle sales have declined by 6% year-over-year. This is a stark contrast to competitors like BYD, which have continued expanding. At the same time, Tesla’s operating margin has fallen to just 7.2%, while BYD has managed to maintain its profitability at competitive levels. The revenue growth that once justified Tesla’s massive valuation premium has also stalled, making it harder to argue that Tesla deserves to trade at higher multiples than traditional automakers.

These numbers tell a clear story. Tesla’s fundamentals are weakening, and the edge it once held over the market has eroded. For an automaker that was once valued on the promise of endless growth, this shift is a serious problem.

Musk’s Political Hijinks Are Hurting Tesla

Musk’s foray into politics is alienating key markets, and the impact is already being seen in Tesla’s sales. In China, the company’s sales fell by 49.2% year-over-year in February, marking the fifth straight month of decline. Even after government subsidies for EVs increased, Tesla has continued losing ground to local competitors. The picture in Europe is just as concerning. Tesla’s market share in the region fell from 18.2% in 2023 to just 6% in early 2025. Many European consumers are turning away from the brand, in part due to Musk’s political involvement, which has made him an increasingly controversial figure overseas.

In Tesla’s home market, the U.S., the company has also been steadily losing dominance. Market share has dropped from a peak of 74.8% in the first quarter of 2022 to just 44.4% by the end of 2024. Legacy automakers and new EV startups are eating into Tesla’s once-commanding lead. Even Tesla’s biggest supporters are beginning to question whether Musk’s distractions are becoming a liability. His involvement with the Trump administration’s Department of Government Efficiency has generated political backlash, and while some conservatives might appreciate his influence in Washington, the overall impact on Tesla’s brand has been negative.

Tesla’s Valuation Remains Excessively High

Despite the sharp decline in its stock price, Tesla remains absurdly expensive compared to other automakers. Analysts continue to question why Tesla is valued at a massive premium when its growth has stalled and its margins are slipping. The company’s forward price-to-earnings ratio sits at an eye-watering 95 times, compared to Toyota’s multiple of just nine. Even BYD, which is still growing rapidly, trades at only 24 times forward earnings. Tesla’s enterprise value-to-EBITDA ratio is just as inflated, sitting at 43 times, while Toyota and BYD trade at 10 times.

Many analysts believe Tesla’s fair value is somewhere between $200 billion and $300 billion, which would imply another 70% downside from current levels. This is based on the fact that Tesla’s primary business—automotive manufacturing—is no longer growing at a pace that would justify its lofty valuation. While the company has other business segments, such as energy storage and AI-driven robotics, they are not contributing meaningfully enough to offset Tesla’s overall slowdown.

Is It Time to Sell Tesla Stock?

JPMorgan analysts say Tesla’s stock decline could be one of the worst in automotive history, and many investors are finally accepting that the stock was always overhyped. Tesla is no longer the dominant EV force it once was. Its market share is shrinking, its growth has stalled, and Musk’s political baggage is turning away potential buyers. Meanwhile, competition is getting stronger, and investors are rethinking whether Tesla deserves its sky-high valuation.

For conservative investors, this means one thing: Tesla stock remains a speculative, overvalued, and risky investment.

Is Tesla’s stock decline a sign of bigger problems ahead? Tell us what you think!

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