Can Tesla Stock Fall to $150?

Tesla Inc. (NASDAQ: TSLA) plunged 14% in a single day yesterday, marking one of its steepest one-day declines in recent years. The stock now trades around $285, down sharply from highs above $350 in 2024 — a loss of more than $150 billion in market value. This sudden drop has reignited investor debate: Is this a temporary setback, or could Tesla be headed even lower — perhaps all the way down to $150?

What’s Driving the Decline?

Despite the sell-off, Tesla remains richly valued. Its price-to-earnings (P/E) ratio sits around 156x, with a price-to-sales (P/S) ratio of 9.3x — multiples typically reserved for high-growth software firms, not capital-intensive automakers. Yet its fundamentals are showing cracks.

Over the last 12 months (as of April 2025), Tesla grew revenue by just 1% year-over-year, while net margins fell from 7.3% to 6.7%. That slow top-line growth, combined with shrinking profitability, already hinted at underlying strain. But the real blow came with its Q1 FY2025 earnings: revenue contracted by 9%, and net margins plunged to barely 2%. That’s a significant deterioration, signaling pressure not just on sales volume but on pricing and cost control as well.

Part of the pressure is political. Elon Musk’s recent public clash with former President Donald Trump has created uncertainty around Tesla’s access to future government contracts and subsidies. Trump has suggested that a future administration could revoke federal support for both Tesla and SpaceX — a threat that rattled markets and added a new layer of headline risk.

Tesla’s brand image is also taking hits. Once admired as a symbol of clean innovation, it’s becoming increasingly politicized. Calls for consumer boycotts and scattered protest activity — including vandalism at charging stations — are raising concerns about demand erosion, especially in the U.S.

And then there’s the competition. Chinese EV makers like BYD and NIO continue to flood global markets with compelling electric vehicles at lower prices. Tesla has responded with price cuts, but those have eroded margins and done little to halt the loss in market share overseas. The result: Tesla is stuck in a margin squeeze while facing flat or negative growth.

How Bad Could It Get?

Let’s explore a realistic downside scenario.

If Tesla’s revenue declines another 10-15% over the next two years — driven by intensifying competition, political headwinds, and reduced pricing power — annual revenue could fall to around $82–86 billion. If annual net margins shrink further, say to 4%, EPS could fall below $1.00.

At that point, Tesla would likely lose its tech-growth premium. A re-rating toward 25–30x earnings would not be surprising. With EPS at $1.00 and a 30x multiple, Tesla could trade at $30. Let that sink in for a minute.

Even a less severe case — $1.50 in EPS at a 50x multiple — points to a share price around $75. While not as extreme as the $30 potential stock price, you cannot deny that the stock dropping to $75 sounds quite plausible. In which case, a drop to $150 is a very real possibility, especially if the next few quarters continue to disappoint.

What Could Drive a Recovery?

Despite the mounting risks, Tesla is far from out of the game. It still dominates the global EV landscape, owns its charging infrastructure, and leads in autonomy and energy solutions. Product expansion — including the Cybertruck, Full Self-Driving (FSD) monetization, and the energy storage division — could stabilize revenues and diversify profit streams.

In a more stable environment, where revenue resumes modest growth of 5–8% annually and net margins rebound to 6–8%, earnings could recover to $4–5/share. Even at a compressed 40–50x multiple, that implies a valuation of $200–250, still a 10% decline from the current level.

A stronger recovery scenario could involve favorable macro conditions: lower interest rates, policy tailwinds, or a return of investor optimism in clean tech. If earnings rise to $6–7/share and the P/E expands to 60x, Tesla could once again approach $400+.

Bottom Line

At $285, Tesla’s valuation still prices in substantial growth — despite warning signs in the latest earnings. A P/E of 156x with just 1% revenue growth and falling margins is a fragile setup. The 9% revenue drop and margin collapse in Q1 FY2025 underscore the growing risk of a sharp earnings decline. If those trends persist, a fall toward $150 is not just plausible — it’s arguably rational.

That said, Tesla remains a leader with long-term potential and loyal shareholders. If it can weather near-term volatility, restore margins, and reinvigorate its product roadmap, the upside case is still on the table. For now, however, the risk-reward skew feels increasingly uncertain.

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