Tesla Stock: Sell or Hold? A 50% Plunge Looms!

Ladies and Gentlemen, buckle up! We're diving headfirst into the wild world of tesla (TSLA) stock, and let me tell you, it's a rollercoaster ride you won't want to miss. The electric vehicle (EV) giant has been on a tear, but recent developments have investors on edge. So, is it time to sell Tesla stock, or should you hold on for the ride? Let's break it down!

First things first, let's talk about the elephant in the room: Tesla's electric-vehicle sales are in free fall. Up until the end of 2023, Elon Musk was promising investors a 50% annual growth in EV production. But 2024 was a different story. EV deliveries shrank by 1%, marking the first annual decline since the Model S hit the market in 2011. And the numbers don't lie: Tesla's sales plunged by 63% year over year in France, almost 60% in Germany, 44% in Sweden, and 38% in Norway. Even in Australia, sales were down by over 33%. And get this: in Germany, overall EV sales increased by 53%, but Tesla's market share is rapidly shrinking. The competition is heating up, and Tesla is feeling the heat.



But here's the kicker: Tesla's stock is trading at a P/E ratio of 161, which is an eye-popping valuation compared to the Nasdaq 100 technology index's P/E of just 33.6. And it's not just the Nasdaq 100; Tesla is three times more expensive than Nvidia stock, which trades at a P/E of 52.2. Nvidia is expected to grow its EPS by a whopping 126% in 2025, while Tesla's EPS plunged by 53% during 2024. So, why the enormous premium in Tesla's valuation? It's a no-brainer: Tesla stock is wildly expensive, and it could lead to a drop of 50% or more.



Now, let's talk about the long-term opportunities. Tesla's Full-Self-Driving (FSD) software and the Cybercab robotaxi are game-changers. Cathie Wood's Ark Investment Management predicts that autonomous ride-hailing could drive Tesla's annual revenue to over $1.2 trillion by 2029. That's a 12-fold growth from its 2024 result of $97.6 billion. And the Cybercab? It's a high-margin revenue stream that could operate around the clock. But here's the thing: the Cybercab isn't scheduled to go into mass production until 2026. That's years away, folks!

And let's not forget about the Optimus humanoid robot. Musk thinks it will generate $10 trillion worth of sales over the long term and even predicts robots will outnumber humans by the year 2040. But again, that's a long-term play. In the meantime, Tesla is struggling with declining passenger electric-vehicle (EV) sales, which is where most of its revenue comes from right now.

So, what's the bottom line? Tesla stock is a high-risk, high-reward play. If you're a long-term investor with a strong stomach, you might want to hold on. But if you're looking for a quick profit, it might be time to sell. The market is unpredictable, and Tesla's stock is no exception. So, do your research, stay informed, and make the call that's right for you. But remember, this is a no-brainer: Tesla stock is wildly expensive, and it could lead to a drop of 50% or more. So, act now, and don't miss out on this opportunity!

Ask Aime: Should I hold or sell Tesla stock?