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With the Tesla (NASDAQ:TSLA) stock price struggling in recent months due to various headwinds, including an electric vehicle demand decline, analysts have been examining the factors that could influence the trajectory of its stock over the next few years.
Below is an in-depth exploration of where leading analysts see Tesla's stock trading in 2025, shedding light on the key drivers and challenges that could shape its future valuation.
Is Tesla Stock Price Dropping?
While Tesla’s stock is down over the last few months, in reality, the Elon Musk-led electric vehicle company has struggled to gain any significant momentum over the last couple of years.
The most recent downturn began in December 2023, after Tesla rose above the $255 per share mark. While the stock is down just 5.3% in the last 12 months, it has declined more than 32.5% in 2024 and is now trading around the $170 per share mark—a far cry from its previous highs.
"With legacy carmakers offering a growing stable of technically-sound EVs in the Western Hemisphere and "pure play" EV carmakers catching up in terms of quality in China, Tesla's massive price ratio premium is being rationalized," Sandeep Rao, Senior Researcher at Leverage Shares, told Investing.com.
Despite Tesla stock weakness we have witnessed recently, Garrett DeSimone, head quant at OptionMetrics, told Investing.com that at-the-money implied volatility "has only slightly risen since the beginning of 2024."
"This suggests that despite prevailing pessimism surrounding the stock, the option market is not pricing in significant deviations from TSLA's usual price movements," he said.
Tesla Stock Forecast 2024 & 2025
Analysts at Goldman Sachs recently cut the Tesla 12-month price target, citing the company’s production and market headwinds.
In its recent research note, the firm said, “We are lowering our Tesla estimates to better reflect what we believe are both production (e.g., Model 3 ramp pace and downtime in Berlin tied to the Red Sea conflict/power loss) and market headwinds.”
“Our 12-month price target is now $190 (from $220 prior), and is based on 50X (unchanged) applied to our updated Q5-Q8 EPS estimate, including SBC,” explained the investment bank.
They believe an upside scenario for the stock over the next 12 to 24 months could be ~$300 using a multiple of 50x to 60x applied to the company’s 2026E EPS, while a downside scenario could be ~$65 to $85 using a multiple of 30x applied to Tesla’s 2024 EPS.
Rao adds that "there's some potential for this being a long-term buying opportunity" in Tesla stock.
Garrett Nelson, a senior equity analyst at CFRA Research, agrees with this suggestion. He told Investing.com that “the YTD decline in the stock price was overdue after it more than doubled last year and that more bearish expectations related to Tesla’s growth are now priced in, presenting a buying opportunity.”
Nelson’s firm currently has a Buy rating on the stock with a 12-month price target of $275.
Sharing a similar sentiment, analysts at Wedbush believe the current negative sentiment on Tesla is “way overdone,” saying in a note that the stock is “overshooting on the negative front as the demand story for Tesla is more in stabilization mode heading to the rest of 2024.”
“Price cuts are moderating, battery costs/production is showing strong cost efficiencies, and a Model 2 (sub $30k vehicle) is on the roadmap for the next year,” added the firm.
“We believe the risk/reward is extremely compelling at these levels with the AI story and FSD making major strides at Tesla and in our opinion represents a valuation that could exceed $1 trillion as this next chapter of the Tesla growth story plays out in the field."
New Tesla Models
CFRA’s Nelson also told Investing.com that his firm continues to believe TSLA will unveil its mass-market, next-generation electric vehicle model later this year, with first production as early as mid-2025. “We think it also could introduce its new Roadster by the end of this year, with first production in 2025,” he added.
Elsewhere, Reuters reported earlier this year that Tesla told suppliers it wants to begin production of a new mass-market electric vehicle codenamed "Redwood (NYSE:RWT)" in mid-2025.
Citing people familiar with the matter, Reuters said Elon Musk stated the EV company anticipates beginning production of its next-generation EV at its Texas factory in the second half of 2025.
Is Tesla a Good Investment?
Whether Tesla is a good investment will depend on the outlook for the electric vehicle market and Tesla’s ability to navigate the current headwinds.
For example, Wedbush is extremely bullish on the stock, as mentioned above, while Wells Fargo recently cut the stock to underweight, stating it is a “growth company with no growth.”
“We see downside risk to volume as price cuts are having a diminishing impact,” said analysts at the bank. “We see headwinds from disappointing deliveries & more price cuts, which likely drive negative EPS revisions. Our 2024 & 2025 EPS estimates are 32% & 52% below consensus, respectively.”
Learn more about Tesla
Tesla stands out in the EV industry as the first company to bring electric vehicles to the attention of the general public. Learn more about TSLA’s incredible journey with Tesla facts, statistics and sales figures.
Investors can also take a step further and explore the wider case for being bullish or bearish on Tesla’s future growth.
