Tesla’s shares have experienced a drastic drop of up to 8% in just one week, a fact that coincides with severe warnings from CEO Elon Musk about the negative impact on the company’s valuation if growth in earnings is not achieved. The CEO has forgotten that his image doesn’t help either.
Musk had previously stated that, without this growth, the stocks could experience a significant drop, similar to “a soufflé crushed by a hammer,” which now seems to be happening in the market.
Profit expectations for the first quarter of 2025 have been significantly reduced, leading to a reevaluation of the stock, which currently has a high price-to-earnings (P/E) ratio of approximately 150.
A company that has lost almost 50% of its stock valuation in just 2 months
To put this in perspective, Toyota, a prominent competitor, operates with a P/E of only 7, which highlights the unsustainability of Tesla’s current situation.
Despite these difficulties, the company recently launched a new update of its FSD autonomous driving system in China. However, the market reaction has been mixed, and this development is expected to contribute to the recognition of some deferred revenues.
However, sales in Europe have decreased by almost 50%, which has intensified the negative perception of the brand in the market.
Analysts continue to adjust their delivery and earnings expectations for the first quarter, with consensus indicating that deliveries could exceed 400,000, although some suggest that this figure could be even lower.
Meanwhile, shareholders are keeping an eye on the anticipated introduction of a fleet of robotaxis in Austin in June, although many see this plan as a “shifting goals” strategy by Musk.