‘Key Risks Remain,’ Says Investor About Tesla Stock

Tesla, Inc. (NASDAQ:TSLA) shares have fallen over 40% since the beginning of the year, with many blaming CEO Elon Musk’s political affiliation with President Trump and his DOGE activities for the large losses.

The EV company had been flying high following Trump’s electoral victory in November, amid excitement regarding Musk’s close connection to the incoming Commander-in-Chief.

And yet, Musk’s activities are unpopular with many both at home and abroad, with a growing anti-Musk sentiment taking shape. In addition, slowing EV sales and deliveries and shrinking profit margins have pushed down share prices. Also hovering in the background are rising global trade tensions, which have also contributed to the losses.

Could the recent dip serve as an opportunity to take a larger position in Tesla? Not according to investor Anna Sokolidou, who argues that the recent dip was long overdue.

“The problems, especially slowing sales growth and decreasing profit margins, started long ago,” notes the investor.

Sokolidou explains that the post-election euphoria was misplaced, as it was based on excitement surrounding AI, Musk, and Trump – not on “business fundamentals.” In fact, TSLA’s valuation in early January was 126x projected earnings, adds the investor, which was well beyond the industry median.

Even though the price has come down, Sokolidou still believes TSLA stock remains elevated. The investor notes that Ferrari – expensive in its own right – has a Price-to-Earnings ratio that is roughly half of TSLA’s.

However, at the end of the day, Sokolidou is unable to look past Tesla’s sales revenues and operating profits.

The investor points out that 2024 annual sales revenues only increased slightly from 2023, while operating profits for Q4 2024 dropped by 23% year-over-year. EV deliveries for 2024 also came in below the numbers in 2023, the first time the company has experienced year-over-year losses.

Increasing tariffs and the negative publicity surrounding Musk also do not inspire much confidence for Sokolidou. A recession could also depress consumer demand, the investor adds.

“Some Tesla investors might prefer to take this opportunity to increase their positions. But the key risks linked to Tesla have not gone away,” concludes Sokolidou, who is rating TSLA a Hold (i.e. Neutral). (To watch Sokolidou’s track record, click here)

Wall Street appears to view Tesla in a similar fashion. With 14 Buy, 11 Hold, and 11 Sell ratings, TSLA possesses a consensus Hold rating. Its 12-month average price target of $337.82 would yield north of 40% in the year ahead. (See TSLA stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.