Tesla Stock To $274?

Posted By:
view original post

Our multifactor analysis indicates that it might be the right moment to divest from TSLA stock. We hold a negative stance on the stock, and a pullback toward $274 appears plausible.

Several pressures are weighing on Tesla. Vehicle sales have contracted this year, with deliveries down 6% across the first nine months of 2025. Margins continue to compress, competition is intensifying, and the long-hyped Cybertruck is shaping up to be a commercial disappointment. Meanwhile, Google’s advances in autonomous driving make it clear that Tesla no longer commands uncontested leadership in the self-driving race.

Although the company’s overall operations and financial footing remain broadly stable, the stock’s very high valuation leaves an unfavorable risk-reward profile, making it an unattractive pick at current levels.

Below is our analysis:

Rather than focusing on selecting stocks, it is more prudent to create a portfolio that is intended to succeed across different market cycles. Our analysis shows that High Quality Portfolio has transformed the uncertainty of stock picking into superior market performance.

Let’s delve into the details concerning each of the evaluated factors, but prior to that, for brief context: With $1.3 Tril in market capitalization, Tesla offers electric vehicles and regulatory credits in the automotive sector, and designs, manufactures, installs, sells, and leases energy generation and storage solutions.

MORE FOR YOU

[1] Valuation Appears Extremely High

This table illustrates how TSLA is valued in comparison to the broader market. For more information, see: TSLA Valuation Ratios

[2] Growth Is Unstable

  • Tesla’s top line has experienced an average growth rate of 9.3% over the past 3 years
  • Its revenues have dropped -1.6% from $97 Bil to $96 Bil over the past 12 months
  • Additionally, its quarterly revenues grew 11.6% to $28 Bil in the most recent quarter compared to $25 Bil a year prior.

This table illustrates how TSLA is growing relative to the broader market. For further information see: TSLA Revenue Comparison

[3] Profitability Appears Weak

  • TSLA’s operating income over the last 12 months was $4.9 Bil representing an operating margin of 5.1%
  • With a cash flow margin of 16.5%, it produced nearly $16 Bil in operating cash flow during this time
  • For the same period, TSLA reported nearly $5.1 Bil in net income, indicating a net margin of approximately 5.3%

This table illustrates TSLA’s profitability compared to the broader market. For more information see: TSLA Operating Income Comparison

[4] Financial Stability Appears Very Strong

  • TSLA Debt was $14 Bil at the close of the latest quarter, while its current Market Cap is $1.3 Tril. This suggests a Debt-to-Equity Ratio of 1.1%
  • TSLA Cash (including cash equivalents) constitutes $42 Bil of $134 Bil in total Assets. This equates to a Cash-to-Assets Ratio of 31.1%

[5] Downturn Resilience Is Weak

TSLA has performed poorer than the S&P 500 index during several economic downturns. We evaluate this based on (a) the extent of the stock’s decline and, (b) the speed of its recovery.

2022 Inflation Shock

  • TSLA shares declined by 73.6% from a high of $409.97 on 4 November 2021 to $108.10 on 3 January 2023, compared to a peak-to-trough decrease of 25.4% for the S&P 500.
  • However, the stock completely bounced back to its pre-Crisis high by 11 December 2024
  • Since that time, the stock rose to a peak of $479.86 on 17 December 2024, and is currently valued at $391.09

2020 Covid Pandemic

  • TSLA stock fell 60.6% from a high of $61.16 on 19 February 2020 to $24.08 on 18 March 2020 compared to a peak-to-trough decline of 33.9% for the S&P 500.
  • However, the stock fully recovered to its pre-Crisis peak by 8 June 2020

However, the risks extend beyond significant market crashes. Stocks can decline even during stable market conditions—consider events such as earnings releases, business developments, or outlook revisions. For an analysis of past recoveries from significant dips, refer to TSLA Dip Buyer Analyses.

The Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has a proven history of consistently outperforming its benchmark, which includes all three indices—the S&P 500, S&P mid-cap, and Russell 2000. What is the reason? As a collective, HQ Portfolio stocks deliver superior returns with less risk when compared to the benchmark index; they experience fewer fluctuations, as seen in HQ Portfolio performance metrics.