Tesla (NASDAQ:TSLA) concluded last year on a high note, with its share price soaring nearly 60% in the final two months, fueled by post-election exuberance following Donald Trump’s victory.
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The market responded positively to Tesla CEO Elon Musk’s close ties with the president-elect and expectations of a more lenient regulatory environment under the incoming Trump administration, driving TSLA shares to new heights.
And yet, if one looks under the hood at Tesla’s 2024 numbers, there are some worrisome signs. While still the undisputed EV leader in the U.S. market, for the first time in its history Tesla’s annual deliveries actually decreased in 2024.
In fact, one investor, known by the pseudonym Investor Express, argues that the ballooning share prices do not reflect the underlying fundamentals of the company.
“With over 80% of revenue from automotive sales and margins resembling legacy automakers, Tesla’s valuation is detached from reality,” the investor warns.
In addition to declining deliveries, Investor Express highlights other concerns: sales growth stagnated at less than 1%, operating income dropped by 9%, and gross profits showed no meaningful improvement. While markets tend to price in future potential, the investor remains skeptical of Musk’s assurances that a dramatic turnaround is on the horizon in the coming year.
“Musk’s 20-30% growth target for 2025 is highly questionable given negative delivery growth in 2024 and stiff competition from Chinese EV makers,” the investor opined.
Adding to the skepticism is Tesla’s lagging performance in autonomous driving technology. Investor Express highlights a recent report showing Tesla’s Full Self-Driving (FSD) system requiring manual corrections every 13 miles – paling in comparison to Alphabet’s Waymo, which averaged just one disengagement every 17,000 miles.
“I would be very wary to imply a significant valuation premium to Tesla stock based on the company’s robotaxi ambitions,” Investor Express advises.
Investor Express has a clear verdict: Given these concerns, TSLA is a Sell. (To watch Investor Express’ track record, click here)
Wall Street analysts also take a cautious stance. With 13 Buy, 11 Hold, and 9 Sell recommendations, Tesla holds a consensus Hold (i.e. Neutral) rating. The 12-month average price target of $320.90 implies a potential downside of ~19%. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
