Tesla, the world’s most valuable car manufacturer with a staggering market cap of $834 billion, is no stranger to volatility. Despite delivering exceptional gains over the past decade, its stock now trades nearly 50% below its previous highs. And things may not be turning around anytime soon.
This week, Tesla’s most vocal supporter on Wall Street—Dan Ives of Wedbush—issued a serious warning, describing the situation as a “code red.” According to Ives, Tesla CEO Elon Musk must distance himself from political distractions if the brand is to regain stability.
He argued that Musk’s growing political involvement, particularly his support of former President Donald Trump, has politicized the Tesla brand and alienated customers globally. The result? Protests, falling demand, and a decline in the stock’s value.
Adding to the concerns are Tesla’s recent financial results. The company’s first-quarter performance was disappointing across the board. Revenue fell to $19.34 billion, significantly short of Wall Street’s $21.11 billion forecast.
Even more alarming, automotive revenue dropped by 20% year-over-year to $14 billion. The dip is attributed to reduced vehicle prices, production line changes for the updated Model Y, and increased promotional discounts.
Tesla’s net income fell sharply by 71% to just $409 million, reflecting deeper challenges in its core business.
While the company’s energy division offered a glimmer of hope with a 67% surge in revenue—driven by demand for energy storage and AI-supportive infrastructure—it wasn’t enough to offset broader losses.
Tesla’s operating margin narrowed to just 2.1%, and if not for $595 million in regulatory credit sales, its automotive segment would have posted a loss.
To make matters worse, Tesla chose not to reaffirm its 2025 growth targets, instead opting to reassess them in the next quarter, citing increasing market uncertainty and shifting global trade dynamics.
Tesla’s stock has been one of the hardest-hit tech names in 2025, falling 30% since the beginning of the year. This slide has proven highly profitable for short sellers, who have pocketed an estimated $11.5 billion in mark-to-market gains.
Tesla now ranks as the third most-shorted stock by dollar value, trailing only Nvidia and Apple. Analysts cite waning vehicle deliveries—down 13% in Q1—and rising competition from low-cost Chinese EV makers as major concerns.
Additionally, Tesla appears to be lagging behind companies like Alphabet’s Waymo in the fast-evolving robotaxi sector.
Despite mounting headwinds, some optimism remains. Tesla has ambitious plans to launch its first autonomous ride-hailing service in Austin, Texas by June 2025.
And while analyst sentiment is mixed, there’s still faith in the company’s long-term potential. As of April, 16 out of 41 analysts rate the stock a “Strong Buy,” although the average target price sits at $280.72—slightly under its current level.