Tesla needed Good Friday off after the week it’s had.
The stock fell 4.37% during the week, continuing a year-long decline that has seen the stock drop more than 40% since January.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵
Tesla (TSLA) shares have been under attack on multiple fronts in recent months. CEO Elon Musk’s foray into politics has resulted in protests and counterprotests, invariably damaging the brand’s reputation among a certain segment of potential buyers.
Tesla’s foothold in Europe was the first domino to fall. Sales in the region dropped 49% during the first two months of the year as Musk flirted with far-right politics in a region that mostly (but not uniformly) leans to the left.
Related: Analyst overhauls Tesla stock forecast amid tariff tussle
However, European sales are a relatively small drop in the bucket for Tesla. The real concerning news of the quarter came when the company announced that overall first-quarter sales dropped 13% year over year, representing the largest decline in company history.
But it’s not just Musk’s political ambitions working against Tesla. The competition in the EV space has undoubtedly become more intense, and while Tesla is by far the market leader in the U.S., with over 48% (as of Q3 2024), that number was 80% in 2019.
Tesla sales slumped in the first quarter.
Image source: Xin/Getty Images
Tesla analyst moves back to fundamentals
Tesla shares closed Thursday trading at $241.37, giving it a trailing price-to-earnings ratio of 117.42 while its forward P/E ratio is above 97.
Musk has long said that investors should consider Tesla a technology company, not a car company. However, the weighted average of the P/E ratio for the tech sector is about 37.30.
P/E ratios as high as Tesla’s demand a company that is growing, and one analyst at Barclays is lowering the firm’s expectations for Tesla.
Barclays analyst Dan Levy and his team maintained an equal weight rating on Tesla while cutting their price target to $275 from $325.
Levy had three “key takes” about the stock:
“Confusing set-up on 1Q with weak fundamentals, but could see positive reaction on better narrative (more engaged Elon, FSD event)” “Expecting trough gross margin driven by volume decline, production inefficiencies””Question ahead on volume — we now expect ’25 volume decline”
Barclays now expects Tesla’s volume to decline in 2025 after formerly being bullish. Just how much volume is lost will be the critical question for the company in the future.
Tesla is expected to report a trough in gross margin crunch this year due to falling volume and production inefficiencies when it reports earnings on April 22.
Tesla could be at a crossroads with its latest earnings
Tesla’s gross profit margin fell to 17.9% in 2024 from 18.2% in 2023 as the company relied on steep discounts to move inventory.
While the company’s stock movements have gotten most of the headlines, the fundamentals underlying Tesla are equally shaky.
Related: Tesla, Elon Musk make drastic decision amid U.S.-China trade war
While the 495,570 EVs the company delivered in the fourth quarter represented an increase over the year prior, it still fell short of analyst estimates.
At the time, uber Bulls like Wedbush’s Dan Ives wrote that while Tesla missed the mark, the number of vehicles it delivered in the quarter was “respectable” and that “strong buyers” would help lift any decline in Tesla shares.
More Automotive news:
Tesla, Elon Musk make drastic decision amid U.S.-China trade warAnother Japanese automaker takes action on tariffsHere’s what car buyers can expect from latest auto tariffs
Three months later, after an unprecedented quarter of falling sales and share prices, Ives and the rest of the investment community may be a little less forgiving.
Analysts are expecting Tesla to report flat earnings of 45 cents per share on revenue of $21.85 billion. The earnings estimate has been revised 18% lower over the last 30 days, according to Zacks.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
