Tesla Faces Significant Market Decline Amid Demand Concerns and Future Opportunities

On March 10, Tesla (NASDAQ: TSLA) stock fell 15%, marking its steepest single-day drop since 2020. This decline has resulted in a 51% reduction from its December peak, equating to more than $700 billion in lost market value.

Several company-specific factors contributed to this downturn, including disappointing sales and increasing apprehension about CEO Elon Musk’s political involvement. Additionally, concerns surrounding the Trump administration’s trade policies have added to investor unease.

Where to invest $1,000 right now? Our analyst team has identified the 10 best stocks to buy now. Learn More »

Despite these challenges, billionaire hedge fund manager Ron Baron has reaffirmed his belief that Tesla could reach a market valuation of $5 trillion within the next decade. This projection indicates a potential upside of 550% from Tesla’s current market capitalization of $764 billion. Investors should remain informed on these developments.

Image source: Getty Images.

Disappointing Financial Results and Weakening Demand

Tesla reported disappointing financial results for the fourth quarter, including the first decline in annual deliveries in company history. Sales increased only 2%, reaching $27.5 billion, while operating margins fell 200 basis points. Non-GAAP earnings rose marginally by 3% to $0.73 per diluted share. Notably, Tesla has missed Wall Street’s earnings estimates in five of the last six quarters.

As 2025 begins, negative trends have continued. Consumer demand weakened in January, leading to a decrease in Tesla’s market share across the U.S., Europe, and China. Analysts suggest that Musk’s political engagement may be impacting consumer sentiment. Nevertheless, optimism persists among some investors.

Even with diminishing market share, Tesla maintained its position as the leader in electric vehicle sales last year. According to Bill Selesky at Argus, it remains the only company globally capable of producing a profitable electric vehicle. Encouraging updates from Musk regarding advancements in autonomous driving and robotics were also shared during the fourth-quarter earnings call.

Multitrillion-Dollar Potential in Robotaxis and Autonomous Robots

Tesla plans to launch an autonomous ride-sharing service (robotaxis) in Austin by June, with expansions to other U.S. cities later in the year. Ark Invest estimates the market for this service could grow to $10 trillion by 2030, and Musk believes robotaxis could elevate the company’s gross profit margins beyond 70%, up from 19% in 2024.

Adam Jonas from Morgan Stanley predicts there will be 900,000 robotaxis on the road by 2035, each contributing approximately $19,200 to annual net income. This could mean $17 billion in profits from robotaxis by 2035. Jonas forecasts that the number of robotaxis could rise more than sevenfold to 7.5 million by 2040, adding an estimated $120 billion to net income.

Meanwhile, hedge-fund billionaire Ron Baron expressed even higher profit expectations, suggesting that each robotaxi could generate between $30,000 and $50,000 in annual profits. This could lead to a net income increase of $45 billion from a fleet of 900,000 and $375 billion from 7.5 million robotaxis.

Although both Jonas and Baron’s figures rely on various assumptions that may not materialize as expected, their bullish perspectives on Tesla are noteworthy for investors to consider.

Current Valuation of Tesla Stock

Market analysts expect Tesla’s adjusted earnings to grow at 24% per year through 2026. This growth rate makes the current valuation of 99 times adjusted earnings appear steep. However, these estimates neglect the potential boost from autonomous driving and robotics in the future.

Alternatively, Adam Jonas anticipates a higher annual growth rate of 35% through 2030, which would make the current valuation seem more reasonable. Investors who trust in Tesla’s capacity to innovate and disrupt transportation and labor markets with robotaxis and autonomous technology should consider building a position now.

A Second Chance at a Potentially Profitable Investment

Do you worry that you missed out on investing in some of the most successful stocks? If so, there’s good news.

Our expert analysts occasionally issue a “Double Down” stock recommendation for companies poised for significant growth. If you think the opportunity has passed, now might be the right time to invest before it’s too late. Here are some noteworthy examples:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $300,143!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $41,138!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $495,976!*

We are currently issuing “Double Down” alerts for three remarkable companies, and this may be one of the last chances for such opportunities.

Continue »

*Stock Advisor returns as of March 10, 2025

Trevor Jennewine owns shares in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.