Valued at a market cap of $1.11 trillion, Tesla (TSLA) is among the most prominent companies globally. While the electric vehicle maker traded near all-time highs in late 2025, it has since declined nearly 30% from its all-time high. 

Despite the ongoing pullback, a few analysts remain bullish on TSLA stock, citing its steep valuation, narrowing profit margins, rising competition, and a challenging macroeconomic environment. 

For instance, analysts from Wells Fargo and JPMorgan have slashed their Tesla price targets to $130 and $115, respectively, due to a fundamental deterioration in Tesla’s core markets. Let’s dive deeper. 

The Bear Case for TSLA Stock

Global sales data reveals troubling trends. European deliveries plummeted 50% year-over-year in January 2025, with weak performance in Germany and France. In the months since, this pattern has only continued. China, a key market for Tesla given its size, is showing concerning signs, with weekly deliveries dropping 69% to just 3,070 vehicles in early May, despite heavy discounting and 0% financing offers. Tesla’s exports from China are also declining, contradicting the explanation that domestic weakness stems from an export focus.

The competitive landscape has undergone significant shifts in recent years. In China, BYD (BYDDY) has gained market share with cheaper, more competitive models, while Tesla struggles to maintain profitability on heavily discounted base Model 3 and Model Y variants. Tesla essentially breaks even in China after accounting for subsidized financing, with margins potentially turning negative if sales continue declining.

Quality control remains problematic, with the Cybertruck facing its eighth recall in 14 months. Tesla also lags Waymo in autonomous driving development, undermining key growth narratives. Lastly, political dynamics create additional headwinds, as CEO Elon Musk’s controversial actions have generated consumer backlash, protests, and damage to the brand.

Gary Black, Managing Partner at The Future Fund LLC, sold his remaining Tesla shares. This is the first time since 2021 he has not had a position in Tesla.  

Black highlighted Tesla’s concerning 188x price-earnings ratio (at the time of his note) for 2025, declining earnings estimates (down 40% year-to-date), and weak delivery performance. He projects Tesla’s Q2 and full-year 2025 deliveries will drop 12% and 10% respectively, worse than Wall Street’s 7% and 5% estimates. 

Black expressed skepticism about Tesla’s upcoming affordable vehicle, suggesting it may be a stripped-down Model Y rather than a market-expanding new design. Despite the sale, he maintains a 6-12 month price target of $310, based on projected 2030 volumes of 5.4 million units and adjusted EPS of $12.

Tesla Delivers a Weak Performance in Q1

Tesla is wrestling with operational and strategic headwinds across multiple fronts, according to its Q1 earnings call. It experienced delivery declines due to a complex factory changeover for the Model Y, implemented simultaneously across all global facilities during the quarter’s weakest sales period.

CEO Elon Musk acknowledged “blowback” from his government efficiency work, resulting in organized protests and vandalism targeting Tesla vehicles and facilities. CFO Vaibhav Taneja specifically cited “negative impact of vandalism and unwarranted hostility towards our brand” affecting certain markets, representing a new category of business risk.

Tariff pressures also created complexity. While Tesla maintains 85% USMCA compliance for its U.S. vehicle lineup, providing relatively competitive advantages, the company faces outsized impacts on its energy business due to Chinese battery cell sourcing. New tariffs on Canadian and Mexican components will pressure profitability.

Despite these challenges, management maintains ambitious autonomous vehicle timelines and production targets, setting high expectations amid operational difficulties.

What Is the Target Price for TSLA Stock?

The fundamental disconnect between Tesla’s premium valuation and deteriorating operational performance across key markets suggests downside risk. Out of the 41 analysts covering Tesla stock, 16 recommend “Strong Buy,” two recommend “Moderate Buy,” 13 recommend “Hold,” and 10 recommend “Strong Sell.” The average target price for TSLA stock is $290, representing a decline of over 15% from current levels.