Toward the end of 2024, EV-king and Zacks Ranked #3 (Hold) stock Tesla (TSLA) was soaring amid a Donald Trump Presidential victory, autonomous vehicle plans, and investor optimism. 2024 was a landmark year for the stock, which ignited after shareholders overwhelmingly voted in favor of CEO Elon Musk’s massive pay package, which a Delaware court tried to block.
However, in 2025, Tesla’s fortunes have reversed 180 degrees. TSLA shares have round-tripped all gains since the US presidential election and are already down more than 40% year-to-date.
Image Source: Kobeissiletter, TradingView
Clearly, based on the stock price, investors are concerned about Elon Musk’s reputation and absence due to politics and “DOGE”, falling European and China sales, and the market in general. Below are five things you need to know about Tesla now:
If there’s one investor who has his finger on the pulse of Tesla’s long-term investing thesis, it’s billionaire Ron Baron. Not only has Baron cultivated a personal relationship with Tesla CEO Elon Musk, but he also invested about $400 million in TSLA stock between 2014 and 2016. Since then, his initial investment has ballooned to over $5 billion. In addition, the last time Baron did a CNBC interview, he called the intermediate bottom in the stock nearly to the penny.
Tuesday morning, Baron reiterated his bullish thesis on Tesla, citing the upcoming Robotaxi rollout. Though Alphabet’s (GOOGL) Waymo has the early Robotaxi lead and is already live in several cities, Baron believes Tesla Robotaxi’s will be more cost-effective and have higher margins. According to Baron, Waymos cost Google between $150k and $200k. Conversely, Baron believes that Tesla Robotaxi’s will cost Tesla ~$35k to produce and will generate between $30-$50k over a multi-year time horizon. Currently, Tesla vehicles produce about $7k in profits, and little more after the initial sale.
International reports of vandalism against Tesla vehicles and property are rising amid political backlash from Elon Musk’s a political participation in the Trump administration as the head of the “Department of Government Efficiency.” After Musk lost nearly $30 billion of his net worth in yesterday’s route, President Trump pledged support for his friend and confidant, writing, “I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American.” Several right-leaning influencers made social media posts with new Teslas after Trump’s show of support.
Tuesday, a Morgan Stanley (MS) analyst made a big bullish call on Tesla shares, saying: “Tesla shares have fallen 50% from the December 17th highs (and down 45%) on poor sales data, negative brand sentiment and market de-grossing. We see the pullback as a buying opportunity for an embodied AI compounder.” The MS bull case sees TSLA getting to $800 a share!
While Tesla CEO Elon Musk is absorbing the brunt of the blame for Tesla’s falling share price, the data suggests that the stock price weakness can also be attributed to the general market weakness. Roughly 75% of stocks follow the market direction, and TSLA is not immune to market weakness.
Image Source: Bloomberg
Nevertheless, TSLA is at a significant tipping point. Shares are working on their 8th consecutive down week while the relative strength index (RSI) indicator flashes its second-most oversold level in Tesla history.
Bottom Line
Tesla’s dramatic reversal in early 2025 highlights Tesla’s inherent volatility, political implications, and doubts. Though concerns surrounding Elon Musk’s multifaceted activities and declining sales have hit the stock, Morgan Stanley and Ron Baron see the crisis as an opportunity.
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This article originally published on Zacks Investment Research (zacks.com).
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