Analyzing Tesla’s Recent Stock Dip and Recovery Potential

Tesla (NASDAQ:TSLA) has recently faced a steep decline, decreasing over -31.6% within just 30 days as of February 28, 2025. With ongoing tariff disputes and the new policies from the Trump administration influencing the market, investors may wonder if now is the right time to buy this dip. Generally, purchasing during such dips can be a sound strategy for quality stocks when market conditions are favorable, particularly if the stock has a history of bouncing back. Notably, Tesla has shown a track record of recovering, with an average return of 131% in one year and a peak return of 183% following past dips.

Image by capital street fx from Pixabay

Current Dip Situation

Just weeks after its significant decline, TSLA has experienced a further decrease of -10.1% since the last dip event. In the table below, a comparison shows the current dip’s period-wise returns against historical medians. Since the recent drop is still unfolding, only median past returns are available for analysis.

Historical Recovery Data

Since 2010, TSLA has seen 10 instances where its stock dipped by 30% or more within a month. Here’s how these events generally played out:

• 83% median peak return within one year following the dip
• 228 days is the median time to achieve peak return post-dip
• -7.5% median maximum drawdown within one year after the dip event

Financial Quality Assessment

Investors need to assess key factors such as revenue growth, profitability, cash flow, and balance sheet strength when considering the implications of a stock dip. Fortunately, Tesla demonstrates robust financial health across these indicators, indicating that its recent dip is unlikely to reflect an underlying deterioration in business conditions.

While dip buying may seem appealing, a thorough evaluation is essential to mitigate risks. This multi-faceted approach is integrated into Trefis portfolio strategies. For those seeking growth potential with less volatility than individual stocks, consider the High Quality portfolio, which has outperformed the S&P and achieved returns exceeding 91% since inception.

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