Will Tesla Stock Crash in 2025?
In an insider report, Germany's highly respected "manager magazine" warns of a possible crash in Tesla's stock price. I can only agree.
For years I have been warning of a possible crash in the Tesla stock. And for years I have been wrong in my negative assessment. Every now and then I get criticized on social media for my lack of imagination because of the lost profits.
I can and have to live with that. After all, Elon Musk has managed to keep the share price high for years. With his visions of robotaxis and humanoid robots, he has successfully distracted his shareholders from the fact that Tesla is primarily a stagnating car manufacturer with a few additional start-up bets.
Today I would like to take the easy way out and recommend a really great and detailed insider report by the editorial team of the German "manager magazine (mm)", which I highly appreciate:
manager magazine: "Blankes Entsetzen - Tesla auf Crashkurs”
(unfortunately only available in German)
Since I know most of you can’t see behind this paywall or understand German, here are a few highlights from the extensive article. Manager magazine spoke to numerous Tesla insiders, investors and managers and came to the following conclusions.
Tesla is on the verge of becoming the biggest market failure in the stock market history and could end up as a case study in how to carelessly squander a massive technological advantage. The dreaded electric raider, long hailed as the greatest of tech disruptors, could end up being the Nokia of the electric revolution.
A multi-brand car dealer in Berlin has reported a noticeable increase in the number of inquiries from people who want to sell their Tesla. Mostly they refuse, explains one of the managers. They find the Tesla purchase too risky. The dealers are worried that they won't be able to resell the Teslas.
In fact, Tesla's brand value is in a free fall: It fell 26 percent globally last year, from $58 billion to $43 billion, according to the consulting firm Brand Finance. It was the second decline in a row, and Tesla fell from 9th to 36th place in the global brand ranking. "Musk has destroyed the brand's positioning as a luxury brand", Tesla is now perceived as an "everyday car".
Tesla had allegedly received a million pre-orders for the Cybertruck. So far, less than 40,000 have been sold. Musk hides the exact number.
Meanwhile, it is rather embarrassing to work for Musk, says one of the top executives. It has become more difficult to attract high-flyers to Tesla. Musk has even become an obstacle. The company expects a wave of key employees to leave in the coming months. The exodus has already begun.
The U.S. authorities are not the ones stopping Elon Musk from offering his robotaxi service... At the federal level and in many states, there are no rules at all that could prevent Elon Musk from launching a fully autonomous fleet... In Texas, Arizona or Florida, for example, he could just start. But he doesn't. His technology isn't advanced enough... Tesla is still "several thousand times" away from the safety level required for a robotaxi.
Despite the enormous backlog, Musk has just announced that he wants to launch a robotaxi service in Austin in June... Critic Missy Cummings believes that he will either miss that deadline or try to use trickery... If Tesla were to actually try this on a larger scale, "people will die," she warns, and "significantly faster" than Elon Musk can apparently imagine.
For a long time now, Elon Musk has been relying on a company outside of Tesla to build the AI capabilities: xAI... In order to get enough staff for xAI in the highly competitive market, he poached about a dozen AI specialists from Tesla... And he is also said to have diverted highly coveted AI chips from Nvidia, originally intended for Tesla, to xAI.
If you haven't seen enough Tesla red flags after reading these quotes from the manager magazine, I recommend this picture. It was shared yesterday by the "Technoking" himself:
Does Elon realize where he's taking the chainsaw and that he's being anything but helpful to his Tesla employees?
Tesla Stock Before The Crash?
These days I keep reading well-intentioned "Buy the Dip" advice for the Tesla stock, which has now corrected almost 30% from its all-time high in December 2024.
I would like to strongly advise against “buying the dip”. Tesla's fundamentals have deteriorated significantly over the past 12 months. Yet the stock is now 80% more expensive than it was a year ago.
Even after the correction, Tesla's valuation is completely absurd with a P/E ratio of 170, a cash flow multiple of 300 and a double-digit EV/Sales ratio. It is being driven only by the many small and large investors who still believe in Elon Musk's visions and are convinced that "this time it will be different".
Sooner or later, reality will catch up with those visions.
VALUATION MATTERS!
Sometimes the grounding of a runaway stock valuation happens sooner, sometimes much later. But sooner or later, the value of a stock always returns to the value of the company in the real world. I could see that happening with Tesla in the course of 2025. Therefore, I have now cautiously added to the Tesla short position in my Long/Short Portfolio.
If you want to continue following Tesla with me and if you’re ready to hear a critical voice from time to time, you can subscribe to my 100% free Substack here:
*Disclaimer: This post is an expression of opinion and not investment advice. The author and/or persons or entities affiliated with him hold short positions in Tesla stock (as of February 21, 2025). The author and/or persons or companies associated with him are affiliated with eToro through an affiliate partnership and through the Popular Investors Program. Copy trading does not constitute investment advice. The value of these investments can go down as well as up. Your capital is at risk. 51% of retail CFD accounts at eToro lose money".
I agree with the article. I was saying to a friend the same thing, the brand is quickly becoming toxic and the boss a liability. I really don't know how hasn't fallen yet. I wonder if it's an index thing or if there's manipulation.
I am not a Tesla shareholder so I am agnostic about the stock, I have also heard that Tesla has a long way to go before reaching FSD. Maybe, Tesla has to admit that there is a need for more than cameras. Many who drive Tesla today say that the FSD makes for little elegant driving and very few want to let go of the wheel unless they are on the Autobahn. Maybe, maybe, maybe ... Tesla is mainly a story stock based on hopes and trust in Elon Musk. Trust can erode fast, hope is often the last thing to die.