Tesla faces critical year in 2025 amid crashing stock and stalled innovation
2025 could be Tesla's most difficult year yet (Illustrative photo: Getty Images)
Elon Musk is under pressure to win back investors as Tesla prepares to report weak Q1 results after a sharp drop in sales and growing political backlash, reports Bloomberg.
Politics, plunging sales, and fading confidence
2025 has started on a bleak note for Tesla, with car sales in the first quarter dropping to their lowest level in nearly three years.
The stock has plunged 53% since its peak in December, and many on Wall Street point to Elon Musk’s deepening political ties as a key reason behind the slide.
"Musk needs to bring the voltage on this earnings call to get the stock out of stall speed," said Dave Mazza, CEO of Roundhill Investments. "Tesla’s stock is stuck in an information air pocket as Elon Musk focused on his DOGE work, while their car sales skid and political headwinds build in important markets."
Earnings for Q1 are expected to show falling profits and flat revenue, with analysts slashing their forecasts in recent weeks.
"The takeaway for most will likely be that 2025 is a throwaway year," said Gene Munster, co-founder of Deepwater Asset Management. Still, he believes this could be the year that "sets the stage for a major rebound in 2026 and beyond."
Betting it all on the future and full self-driving
Despite its brutal selloff, Tesla’s valuation remains sky-high — trading at 78 times forward earnings compared to the S&P 500’s average of 19.
"Any report from Tesla matters less than what the future holds, since most of the value in the stock is based on the future," said Eric Schiffer, CEO of Patriarch Organization.
The company’s biggest hope now lies in its upcoming self-driving taxi launch in Austin, scheduled for June. However, hopes for a cheaper version of the Model Y took a hit after reports emerged of a delay of at least three months.
"Tesla faces questions on increasingly weaker fundamentals," warned Barclays analyst Dan Levy. "Margins are under pressure, and sales volume may be hard to grow this year." Still, he added, "a good narrative could outweigh weak fundamentals."
Musk’s fortune takes a hit as Trump’s tariffs and political ties weigh on Tesla (Illustrative photo: Getty Images)
Unless Musk delivers a bold new vision, Tesla’s 2025 may go down as a lost opportunity.
Recently, Bloomberg also reported that Trump’s new tariffs are hitting Musk’s businesses hard, with Tesla shares tumbling and the billionaire’s net worth falling below $300 billion for the first time since November. Political ties that once boosted his fortune are now weighing heavily on the company’s performance and public image.
