3 Forces That Could Shake Tesla Stock

Tesla (TSLA) has stumbled before. Its stock has plunged more than 30% within a span of less than 2 months on as many as 8 different occasions in recent years, wiping out billions in market value, and erasing massive gains in a single correction. If history is any guide, TSLA stock isn’t immune to sudden, sharp declines.

Tesla’s stock has surged to fresh highs, buoyed by an almost existential shift in investor perception, now valuing the company more for its nascent AI and robotaxi ambitions than its automotive sales. Yet, this soaring valuation, underpinned by future technological promises rather than immediate EV fundamentals, creates a distinct vulnerability as intense competition and evolving regulatory landscapes could easily temper expectations, revealing the delicate foundation of its current momentum.

What Could Send The Stock Crashing?

• Global EV Competition: Tesla’s Q1 2025 U.S. market share fell to 43.2% (from 52.7% in 2024), with BYD leading globally at 15.4% by Q3 2025. Chinese rivals offer more affordable models, impacting Tesla’s sales. Tesla still leads in Model Y sales year-to-date.
• Margin & Demand Slump: Tesla’s operating margin dropped to 7.54% (TTM Dec 2025) from 9.56% (end of 2024). U.S. sales declined 23% in November 2025, partially due to expired tax credits.
• FSD Regulatory Delays: Full Self-Driving (FSD) faces significant global regulatory hurdles, delaying full EU availability until potentially 2028 due to the AI Act and data concerns in China. Tesla commenced driverless robotaxi testing in Austin.

What’s The Worst That Could Happen?

Looking at Tesla’s past market dips helps put its risk in perspective. The 2018 correction wiped about 53.5% off its peak, while the Covid pandemic saw an even steeper drop of 60.6%. The inflation shock hit the hardest with a 73.6% fall from top to bottom. Even with strong fundamentals and hype around the name, Tesla hasn’t been immune to big sell-offs during tough market times. It’s a reminder that no stock, no matter how popular, is fully shielded from major downturns.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read TSLA Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

Is Risk Showing Up In The Company’s Financials Yet?

Let’s take a look at fundamentals

• Revenue Growth: -1.6% LTM and 9.3% last 3-year average.
• Cash Generation: Nearly 7.1% free cash flow margin and 5.1% operating margin LTM.
• Valuation: Tesla stock trades at a P/E multiple of 282.6

*LTM: Last Twelve Months

If you want more details, read Buy or Sell TSLA Stock.

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