Tesla share price: Elon Musk-led EV firm falls out of trillion-dollar club after weak earnings. Opportunity to buy?
Tesla's share price closed Thursday's session following the announcement of its June quarter results 8.20% lower at $305.30. The stock was trading marginally lower in pre-market trade today, signalling a tepid start for the stock in the US market. Following the sharp selloff yesterday, Tesla's market capitalisation also declined $984.73 billion.
The automaker reported one of its most difficult quarters in over a decade, marked by a second consecutive revenue slide.
Tesla's revenue declined 12% and profit fell 16% amid rising competition in the key markets such as Europe and China. Moreover, its core EV business deteriorated due to an ageing lineup, with many prospective buyers being turned off by Musk's foray into right-wing politics.
Moreover, with no affordable vehicles on the horizon until the last three months of the year and the upcoming elimination of a $7,500 US tax break for EV buyers, Musk acknowledged that the company could have "a few rough quarters."
Additionally, the company is looking to transition to a future focused less on selling cars and more on offering people rides in self-driving cars. Musk spent the earnings call talking less about car sales and more about robotaxis, automated driving software and robotics, which he says is the future of the company.
According to a Bloomberg report, Wall Street has slashed 2025 profit estimates for Tesla by 28% over the past three months. For the second quarter, analysts are projecting adjusted earnings of 42 cents a share on revenue of $22.6 billion, down 18% and 11%, respectively, from the same period a year ago. That would represent the biggest drop in quarterly sales since 2012.
Ross Maxwell, Global Strategy Lead at VT Markets, said weaker demand, the loss of US EV tax incentives and production line changes saw Tesla's revenue fall sharply in Q1 and forcing it to adjust its Q2 earnings per share down to $0.40. "This caused a selloff."
Tesla stock has now slumped over 35% from its 2024 highs, dragging its market cap below the $1 trillion mark — which was once a psychological moat for tech-investors, said Harshal Dasani, Business Head at INVasset PMS. He believes that more than the numbers, the bigger challenge is leadership distraction.
The EV stock, down 19.5% for the year, is also the worst-performing stock in 2025 among the 'Magnificent Seven'.
Ongoing macroeconomic uncertainty, intensifying tariff wars, and evolving US EV regulatory policies continue to cast a shadow over the company's business model, said Prashanth Tapse, Senior VP-Research at Mehta Equities.
"These factors have led to sustained negative sentiment around Tesla's near-term performance. Growth pressure has also been exacerbated by geopolitical dynamics, including a perceived strain in the relationship between Elon Musk and former US President Donald Trump," Tapse added.
Despite such concerns and stock price crash, Tesla shares remain richly valued at 142 times projected profits, compared with 27 times for the Nasdaq 100 Index, according to Bloomberg. This reflects a significant disconnect from the company's declining financial prospects. Against this backdrop, analysts largely see short-term pressure for Tesla stock.
Putting it simply, Dasani said that unless margin pressures and leadership focus stabilise, Tesla may remain a trader's stock, not an investor's conviction buy.
Meanwhile, Tapse continues to see more pressure in near term from shrinking deliveries, tariff exposures, and macro downturns as market competition and regulatory hurdles remain key challenges.
As per Maxwell, the answer to whether the current downturn in Tesla is an opportunity or concern, depends on the time horizon and risk appetite.
He said that Tesla is still a strong global brand and its diversification into robotaxi, robotics, AI, and energy services are strategic opportunity for it to improve earnings in the future. Its access to the growing Indian market could also help give it a boost in the future.
"However, this will take time to play out and have an impact on Tesla's earnings, and in the short-term there is still huge competition and much cheaper alternatives available, especially from China, which are impacting Tesla's margins and reducing demand. Political volatility surrounding Elon Musk and Donald Trump's relationship can also put Tesla under pressure in the short term as it loses its EV tax incentives," he added.
Anshul Jain, Head of Research at Lakshmishree Investment, Tesla has been trading within a symmetrical triangle for the past 44 days, signaling a phase of consolidation after recent volatility on tech charts.
"The stock remains far from a breakout, and a few more sessions of tight range movement are likely before a directional move unfolds. The pivot point for a bullish breakout is placed at 336, and a decisive breach above this level will likely trigger a strong rally. If confirmed, the breakout has the potential to drive the stock towards the 400 zone in the short to medium term," Jain added.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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