Tesla Stock Could Plunge by Another 50% (or More)

Tesla Inc. (TSLA) stock has been on a rollercoaster ride, with its share price plummeting by over 30% from its all-time high in December 2024. The recent selloff, which has seen the stock drop by 21% since Inauguration Day, has raised concerns among investors about the company's future prospects. While some analysts attribute the decline to Elon Musk's new role in the White House, others point to the company's recent financial performance and growing competition in the electric vehicle (EV) market.



Tesla's recent earnings reports have shown a decline in profit margins and missed Wall Street estimates, which has led to investor jitters. The company's adjusted operating margin has been shrinking for four consecutive quarters, dropping to 14.4% in Q2 2025, the lowest in three years. Additionally, Tesla's expenses have been rising, particularly in areas like AI infrastructure and robotics development, which has put downward pressure on the company's profit margins and stock price.



The company's recent struggles have divided current and former shareholders. Critics of Musk fault his new role and polarizing reputation, blaming recent reports showing lackluster sales in some regions on his foray into politics. They say Musk must step away from the Trump administration for the company to thrive. However, supporters argue that Musk's role in the White House has little to do with the selloff, noting that Tesla shares remain higher than where they stood on Election Day. Instead, some say, the company is suffering growing pains as it weathers stiff competition in electric vehicles and pursues new ventures like self-driving taxis.



Tesla faces intense competition from traditional automakers and emerging EV startups, which has put pressure on its market share and pricing. For instance, China-based competitor BYD unveiled advances in self-driving technology, which could challenge Tesla's dominance in the EV market. Additionally, Tesla's recent price wars with competitors have put downward pressure on the company's profit margins and stock price.



Tesla's recent struggles have led some investors to question the company's long-term prospects. However, it is essential to note that Tesla has a strong brand, innovative technology, and a visionary leader in Elon Musk. Additionally, Tesla's investments in AI and robotics could pay off in the long run, driving growth and profitability. The company's recent setbacks may be temporary, and its long-term prospects could still be positive.

In conclusion, Tesla's recent earnings reports and financial performance have shown both positive and negative aspects, which may impact the stock's long-term prospects. Investors should closely monitor the company's progress and consider both the short-term challenges and long-term opportunities when evaluating Tesla's stock. While the company faces significant headwinds, its strong brand, innovative technology, and visionary leadership could help it overcome these obstacles and achieve long-term success.