Tesla Faces Steepest Stock Decline in Five Years, Market Valuation Dips
New York, Monday, 10 March 2025.
Tesla’s shares have dropped 15% amid market challenges, erasing over $800 billion in market cap since December 2024, with political factors and increasing competition as possible contributors to the decline.
Market Impact and Recent Performance
Tesla’s stock has experienced its longest losing streak since 2010, falling for seven consecutive weeks [1]. The decline has been particularly severe since reaching its peak of $479.86 on December 17, 2024, with shares losing over 50% of their value [1]. The company’s valuation took another significant hit today, March 10, 2025, with a 15% plunge that represents its steepest single-day decline since September 2020 [1]. This downturn occurs against the backdrop of broader market volatility, with the Nasdaq tumbling almost 4% on the same day [1].
European Sales Challenges
A major factor contributing to Tesla’s stock decline has been its performance in the European market. January 2025 saw Tesla’s new vehicle sales plummet by approximately 50% in Europe compared to the previous year [3]. This decline is particularly noteworthy as it contrasts sharply with the overall European electric vehicle market, which grew by over 33% during the same period [3]. Industry analyst Russ Mould of AJ Bell attributes this decline primarily to increasing competition in the sector [3], while former Tesla senior director Peter Bardenfleth-Hansen points to multiple factors creating a ‘domino effect’ on the company’s performance [3].
Financial and Valuation Metrics
The market turbulence has significantly impacted Tesla’s financial metrics. The company’s forward price-to-earnings ratio stands at 88, substantially higher than the S&P 500’s multiple of 21 [5]. This valuation concern has prompted analytical responses, with Bank of America analyst John Murphy recently downgrading Tesla’s price target from $490 to $380 on March 4, 2025 [5]. Adding to investor concerns, Tesla reported its first year-over-year sales decline in over a decade in 2024 [2].
Future Outlook and Strategic Initiatives
Despite current challenges, Tesla is pursuing strategic initiatives to maintain its market position. The company has announced plans to launch a robotaxi test program in Austin, Texas, in June 2025 [2]. However, competitive pressures continue to mount, with Chinese manufacturer BYD introducing self-driving technology for models priced as low as $9,600 [2]. Matt Maley, chief market strategist at Miller Tabak + Co., notes that Tesla’s current valuation metrics suggest the shares remain ‘very expensive’ [5], indicating potential continued volatility in the stock’s performance.