Is It Time To Buy Tesla Stock’s Dip?

Amid the tariff wars and bold steps of the new Trump administration, Tesla (NASDAQ:TSLA) stock experienced a significant dip recently, falling more than -31.6% in less than a span of 30 days, as of 2/28/2025. Should you buy this dip? Dip buying is a viable strategy for quality stocks when broad market conditions are favorable, provided that the stock has a history of recovering from dips. As it turns out, Tesla not only passes basic fundamental quality checks, but has also returned, on average, 131% in one year, and 183% as peak return, following such dips historically.

Image by capital street fx from Pixabay

Current Dip Opportunity

It has been less than a month since TSLA last experienced a significant dip event – defined as >30% dip within 30 days – and has returned, since then, -10.1%.
A split of period-wise returns for the current dip event compared with historical medians in the table below. In this case, only past median returns are available as the current dip event occurred very recently.

Past Data On Recovery From Dips

TSLA had 10 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered

• 83% median peak return within 1 year of dip event
• 228 days is median time to peak return after dip event
• -7.5% median max drawdown within 1 year of dip event

Tesla Passes Basic Financial Quality Checks

Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being a sign of a deteriorating business situation. Tesla easily passes these checks.

Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.