Tesla Stock Faces Significant Drop Amid Weaker Demand

In 2025, Tesla Inc (NASDAQ: TSLA) has seen a sharp decline in stock prices, approaching a 50% drop from its all-time highs. Recent analyses indicate that the company's stock is increasingly under pressure due to softening demand in key markets such as Europe.

Analyst Insights

Goldman Sachs analyst Mark Delaney has revised the price target for Tesla, reducing it from $345 to $320 while maintaining a Neutral rating. Delaney highlights that broad demand trends for electric vehicles, coupled with significant demand reductions in Europe, are likely to result in lower delivery estimates for the automaker in the near future.

Challenges Ahead

In his recent investor note, Delaney emphasizes that Tesla will encounter "difficult fundamental conditions" in the short term. He forecasts that earnings per share (EPS) estimates for 2025 will fall below market expectations due to these ongoing challenges.

While acknowledging that Tesla's long-term earnings growth may benefit from expanding software revenue, such as Full Self-Driving (FSD), Delaney is cautious about the immediate future. He notes that reduced deliveries in the first quarter appear to be attributed to the transition to the Model Y and generally weaker demand.

Future Expectations

Looking ahead, Delaney anticipates an uptick in deliveries by March, supported by the ramp-up of the refreshed Model Y. Nonetheless, he has adjusted his first-quarter delivery estimate downward from 399,000 units to 375,000 units, citing a 40% year-over-year decline in European sales in January. For the entire fiscal year, the new delivery estimate stands at 1.91 million, a decrease from the previous 1.96 million target.

Moreover, consumer survey data suggests that Tesla's brand value and trust ratings have weakened in recent months, which could further impact sales. Delaney also points out the increasing competition in China, where rival companies are launching comparable software at no additional cost to consumers, making it tougher for Tesla to capitalize on its FSD revenue in that market.

Tesla Stock Performance

As of Wednesday, Tesla's stock trades at $271.61, within a 52-week range of $138.80 to $488.54, marking a year-to-date decline of 28.4% in 2025. Historically, the stock experienced a significant surge following Donald Trump's election victory in 2024, but it has since retreated to levels nearly identical to those recorded around that time.

After closing at $251.44 on November 5, the stock opened at $284.67 on November 6, following the election results. Currently priced at $271.61, Tesla's stock approaches a nearly 50% decrease from its all-time high reached in December.

Market Perspectives

As the market navigates these challenging dynamics, it remains critical for investors to stay informed about Tesla's performance and the broader electric vehicle landscape.

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