Tesla (NASDAQ: TSLA) hit a document excessive of $480 per share in December after Donald Trump received the presidential election. The market assumed the connection between CEO Elon Musk and President Donald Trump would profit the corporate ultimately, however that profit has but to materialize.
As an alternative, Tesla inventory tumbled greater than 50% from its document excessive in early March, one thing that has occurred solely thrice earlier than. Shares have since rebounded barely however stay 45% beneath their excessive. Luckily, historical past says Tesla will finally recoup its losses.
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Historical past says Tesla inventory will finally rocket increased and recoup its losses
As talked about, Tesla inventory has declined no less than 50% from a document 4 instances because the firm went public in June 2010. We will overview the primary three incidents to make an informed guess about how the present one may play out. This is what occurred the final thrice:
- 2017: Tesla shares peaked at round $26 in September 2017 earlier than dropping 54% by June 2019. Mannequin 3 manufacturing issues, Mannequin Y manufacturing delays, and disappointing monetary outcomes drove the decline. Shares reached a brand new excessive in December 2019, shortly after the Cybertruck unveiling. A bullish forecast from Ark Make investments CEO Cathie Wood additionally helped. The inventory returned 394% in the course of the yr following its low in June 2019.
- 2020: Tesla shares peaked at round $61 in February 2020 earlier than falling 60% by March 2020. Whereas the final drawdown was pushed by company-specific elements, this one aligned with a pointy decline within the broader inventory market because the speedy unfold of COVID-19 led to manufacturing unit closures and provide chain disruptions. The inventory reached a brand new excessive in June 2020, and it returned 804% in the course of the yr following its low in March 2020.
- 2021: Tesla shares peaked at round $410 in November 2021 earlier than falling 73% by December 2022. Provide chain issues and weak demand amid rising rates of interest triggered the decline, as did the notion that CEO Elon Musk was distracted after buying Twitter. Shares hit a brand new excessive in December 2024, shortly after Donald Trump was elected president. The inventory returned 140% in the course of the yr following its low in December 2022.
Right here is the large image: Historical past says Tesla will finally recoup its losses. The inventory not solely rebounded from the final three declines exceeding 50% but in addition returned a median of 446% in the course of the 12 months following the underside of these declines. In fact, it’s inconceivable to know whether or not the present decline has reached the underside, however that info remains to be encouraging for shareholders.
Nonetheless, there may be some unhealthy information. The present decline is basically a continuation of the final one as a result of the underlying issues have been by no means solved. As an alternative, the rebound was pushed by expectations that Tesla would profit from the ties between Musk and President Trump. Nonetheless, the corporate remains to be battling weak demand, and Musk is arguably extra distracted than ever.
Picture supply: Getty photos.
Tesla wants to revive demand and convey robotaxis to market
Demand for Teslas is deteriorating world wide. The corporate misplaced market share throughout its three main markets in 2024, and the losses have accelerated in 2025. In January, Tesla’s market share fell by practically 7 proportion factors within the U.S., 8 proportion factors in Europe, and a pair of proportion factors in China.
One cause for the weak point is elevated competitors from different automakers, which has been difficult for Tesla because of its ageing lineup of electric cars. The corporate plans to construct a extra reasonably priced car this yr, reportedly referred to as the Mannequin Q, which can assist to a point. Nonetheless, weak demand is probably going additionally associated to Elon Musk’s involvement in politics.
Tesla gross sales declined 49% in Europe in the course of the first two months of 2025 regardless of sturdy progress within the broader electrical automobile market. That alarming determine suggests Musk is damaging the model by alienating potential consumers. The opposite subject with Musk dedicating a lot time to the Division of Authorities Effectivity (DOGE) is that it raises questions on how actively concerned he’s with Tesla.
That’s worrisome not solely as a result of the corporate is dropping market share but in addition as a result of it plans to launch an autonomous ride-sharing (robotaxi) service in Austin, Texas, this June. Alphabet‘s Waymo has been providing autonomous rides in a number of cities for years, so Tesla is already behind the curve. Which means the stakes are excessive, and the launch should go easily in order that Tesla can start to catch up.
Importantly, Tesla’s full self-driving software program is powered totally by laptop imaginative and prescient. That makes its robotaxis cheaper and extra scalable than Waymo robotaxis, which use lidar and radar (along with cameras) to map streets in excessive definition. Tesla avoids these prices and the related time dedication by relying solely on cameras.
So, the corporate may theoretically launch robotaxis in any metropolis as soon as its full self-driving software program helps true autonomy. By comparability, Waymo should meticulously map the metropolitan areas the place it operates beforehand. Nonetheless, Tesla faces execution threat. Waymo has a head start, and its robotaxis could also be safer as a result of they’re geared up with a number of sorts of sensors.
Right here is the underside line: Tesla shares have fallen by greater than 50% thrice earlier than. The inventory has at all times generated triple-digit returns in the course of the yr after hitting backside and has at all times finally reached a brand new excessive. Nonetheless, for that development to proceed, I believe Tesla should cope with demand points and keep away from everlasting harm to the model. The corporate should additionally efficiently convey robotaxis to market within the close to future. The inventory might proceed falling with out these catalysts.
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- Nvidia: for those who invested $1,000 after we doubled down in 2009, you’d have $284,402!*
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Proper now, we’re issuing “Double Down” alerts for 3 unimaginable firms, and there is probably not one other probability like this anytime quickly.
*Inventory Advisor returns as of March 24, 2025
Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Trevor Jennewine has positions in Tesla. The Motley Idiot has positions in and recommends Alphabet and Tesla. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
