Tesla stock (NASDAQ: TSLA) has always been a thrill ride for investors, but as of March 11, 2025, the ride has taken a stomach-churning plunge. After peaking with a euphoric 91% surge following the U.S. presidential election in November 2024—driven by hopes of Elon Musk's alliance with President Donald Trump—the stock has plunged dramatically. On Monday, March 10, 2025, TSLA dropped over 15% in a single day, marking its worst decline since September 2020, and wiping out more than $700 billion from its December 2024 market value peak. The current stock price rests at $222.15, 53% lower than its previous high, leaving investors scrambling to figure out what went wrong.
Starting with the numbers, Tesla stock has seen significant fluctuations this year. After peaking at around $480 per share mid-December 2024, it sunk to approximately $220 by early March 2025, erasing over $800 billion in market capitalization throughout the process. Economic analysts are particularly concerned as they point to various reasons behind this downturn. For one, global electric vehicle (EV) sales dropped 1% in 2024—the first annual decline the company has experienced in over a decade—worsening fears among investors.
Investor sentiment is coupled with alarming sales statistics: registrations for Tesla vehicles fell by 45% across Europe during January 2025 alone, with Germany experiencing a staggering 76% plunge. A worrying Strategic Vision survey revealed Tesla’s appeal to U.S. car shoppers plummeted from 22% in 2022 to just 7% last year, posing serious questions about future demand.
Adding to these woes, Musk’s increased political engagements since joining Trump’s administration as co-leader of the Department of Government Efficiency (DOGE) have drawn significant scrutiny. Investors typically prefer corporate leaders to maintain political neutrality to minimize potential brand damage or regulatory penalties. Musk’s recent endorsements of far-right movements, including Germany’s AfD party, have led to protests and vandalism targeting Tesla stores, as well as multiple boycotts of the brand, creating significant backlash against the company.
The market's broader sentiment indicates rising fears beyond Tesla's challenges. Investors witnessed the Nasdaq 100, which suffered losses of $1.1 trillion, primarily due to the technology sector’s decline. Many tech giants, including Amazon, Meta, Alphabet, Microsoft, and Netflix, also saw heavy losses correlatively, contributing to the perception of risk surrounding tech stocks. Consequently, Tesla’s revenue has fallen 8% year-over-year in the fiscal Q4 2024 along with UBS predicting another 5% delivery decline for 2025—significantly lower than the growth aspirations previously projected.
Despite current conditions, analysts remain divided about the future of TSLA. Stock market forecasters present varied outlooks; for example, JPMorgan set its target price at $135, indicating the potential for another 40% drop, buoyed by slumping EV sales and Musk’s political distractions. Conversely, ARK Invest holds on to optimism with their wild target of $3,000, anchored on the belief of extraordinary growth stemming from Tesla’s future autonomous ride-hailing capabilities.
Morningstar provides its estimation of the fair value of Tesla at $250 as of March 11, indicating the stock is trading near this threshold and recommending prospective investors wait for more favorable circumstances before entry. Other analysts paint less rosy images: Ross Gerber views a potential 50% drop as probable, especially with delays in Full Self-Driving (FSD) and significant concerns around the company's focus caused by Musk's political endeavors.
For investors with heavy concentrations of their portfolios tied to Tesla, the recent plunge has been punishing. Portfolios with significant Tesla holdings have taken notable hits; for example, one with 50% of total value tied to TSLA would be down around 25% after the stock’s latest downturn. The drop has not spared even the largest shareholder—Elon Musk—whose net worth has nosedived by over $130 billion, much to the bewilderment of investors and analysts praised for their extreme volatility perception.
How should investors react to these tumultuous events? Empirical wisdom advocates risk management and diversification as fundamental strategies to mitigate losses during such downturns. Financial advisors often cite it’s prudent to confine any single stock to 10-20% of one’s overall portfolio to prevent concentrated risks. Investing solely in high-flyer stocks, like Tesla, can turn disastrous amid challenging market conditions.
Many Tesla bears have contemplated the viability of cutting their losses, reflecting on the considerable dips and altering strategies accordingly. For long-term shareholders still optimistic about Tesla's vision and technological innovation, it could be wise to hold on during the downturn, believing the company will eventually rebound, perhaps leveraging the turmoil as opportunities to make additional purchases at lower prices.
Is now the right time to invest or reconsider Tesla? Market sentiments indicate it may be beneficial to wait for more significant positive indicators or stock rebounds before allocating more capital. Patience is required, along with the foresight of fundamentals rather than temporary price shocks, ensuring the long-term growth potential of the stock complements appropriate investment strategies.