Tesla Inc. (NASDAQ: TSLA) is no longer just an electric vehicle (EV) company; it’s a technological powerhouse reshaping industries ranging from energy storage to robotics. However, the once high-flying stock has taken a dramatic turn in 2025, losing nearly 40% of its value year to date. This sharp decline has placed Tesla at the bottom of the elite “Magnificent Seven” stocks, making it the group’s worst performer in the current market climate.
Tesla’s Stock Struggles in 2025
Despite surging 53% in 2024, Tesla’s momentum has stalled amid intensifying competition, brand challenges, and weaker international sales. Investors who once saw Tesla as a growth juggernaut now grapple with concerns over its valuation and long-term positioning. Adding to the turmoil is CEO Elon Musk’s increasing political alignment with former President Donald Trump, a move that has dented Tesla’s brand image and alienated a portion of its customer base.
While the stock still commands a premium valuation, it has slipped below its historical trading levels. Currently, Tesla trades at 94.3 times forward earnings and 7.92 times sales—significantly lower than its five-year averages of 116.39x and 11.91x, respectively. With its stock price at multi-year lows, investors are left wondering whether this represents a rare buying opportunity or a signal of a deeper fundamental shift.
Q4 2024 Earnings: A Mixed Bag
Tesla’s fourth-quarter earnings, reported on January 29, failed to impress Wall Street. Revenue rose a modest 2% year-over-year to $25.7 billion, missing analysts’ expectations of $27.1 billion. Adjusted earnings per share (EPS) increased 3% from the prior year to $0.73, but still fell 4.8% short of forecasts.
The biggest concern? Tesla’s core automotive business saw an 8% decline in revenue, falling to $19.8 billion from $21.6 billion a year ago. The drop was primarily attributed to price cuts across its Model 3, Model Y, Model S, and Model X lineup. While these reductions were aimed at boosting sales volume, they have inevitably squeezed margins and raised concerns about profitability.
However, not all was negative. Tesla’s energy generation and storage segment posted a stunning 113% year-over-year growth, signaling strength in its non-EV operations. Services revenue also climbed 31%, underscoring the company’s ability to diversify beyond its automotive roots.
A ‘Seminal Year’ for Tesla’s Autonomous Future
Despite the setbacks, Tesla is doubling down on its vision for autonomous driving. The company has declared 2025 as a “seminal year” in its history, focusing heavily on advancing Full Self-Driving (FSD) technology. Tesla aims to surpass human safety levels in autonomy and introduce an unsupervised FSD option for customers.
Further fueling excitement is Tesla’s upcoming robotaxi service, set to launch in select U.S. regions later this year. The company is also accelerating its FSD (Supervised) expansion, with plans to bring its autonomous tech to European and Chinese markets in 2025. If successful, these initiatives could redefine Tesla’s business model and open new revenue streams beyond traditional car sales.
What’s Next for Tesla?
Tesla’s recent struggles highlight the complexities of maintaining dominance in a rapidly evolving EV market. With mounting competition from Chinese automakers and traditional car manufacturers ramping up their EV production, Tesla faces an uphill battle. However, its expansion into AI-driven autonomy, energy solutions, and robotics could be the catalysts that reignite investor enthusiasm.
While the stock’s decline has been painful for shareholders, Tesla’s commitment to innovation remains unwavering. The big question now is whether these long-term bets will pay off and help Tesla reclaim its market leadership—or if 2025 will mark a deeper turning point for the EV giant.
