Tesla: Fewer Buyers of the Dip & the Cars

Tesla is down 12% on the year vs a 6% rise in the Nasdaq 100. It's trading like most auto stocks, not AI stocks.

• I see no reason to buy the dip or cover my short at these levels given how bad the fundamentals are in the auto industry. On average, the 4 carmakers who’ve given 2025 guidance aim for profit declines. Tesla gives no profit guidance.

• Since its all-time high of $480 on December 17th last year, Tesla’s stock is down by 26% while the Nasdaq 100 is roughly flat at +0.7%. Since the start of this year, however, Tesla is down 12% while the Nasdaq 100 is up 6%.

• Much of this has to do with weak Q4 2024 results and intensifying negativity towards the Tesla brand among car buyers due to Musk’s political antics. The deterioration in Tesla’s brand image was highlighted by Tesla sales outside of North America dropping by 26% YoY in January. February is looking worse.

• Despite Tesla’s 2025 guidance for a “return to growth” after deliveries fell by 1% last year, people are starting to realize that this may not be possible. The revulsion towards Musk has become so intense that there were “Boycott Tesla” demonstrations over the weekend at dozens of Tesla showrooms in the US (35% of Tesla’s car sales).

• This is making it hard to buy the dip in Tesla shares right now, especially as the overall market in the US seems overbought at the moment and could use a correction.

• But it feels like even if there is dip-buying of Tesla shares, it could be met with more selling. While there’s been some good news recently (China), there’s been more bad news (details below) as 2025 earnings estimates continue to drop faster than the share price (Figure 5).