Valued at a market cap of $834 billion, Tesla (TSLA) is the largest automobile company globally. While the electric vehicle (EV) stock has delivered game-changing returns to long-term shareholders, it trades almost 50% below all-time highs in 2025. 

Earlier this week, Wedbush analyst Dan Ives warned that Tesla faces a “code red situation” and emphasized that CEO Elon Musk must step back from politics to save the brand. According to Ives, Musk’s involvement with President Donald Trump’s administration has turned Tesla into “a political symbol globally,” resulting in stock price declines, protests, and “15%-20% permanent demand destruction.”

While Ives remains long-term bullish on Tesla as "one of the most disruptive technology companies,” he explained that recovery depends on Musk refocusing on Tesla full-time and leaving his government position.

Tesla Continues to Disappoint in Q1

Tesla reported disappointing Q1 results on Tuesday, falling short of analyst expectations as automotive revenue plunged 20% from a year earlier, adding to the EV maker’s mounting challenges.

Tesla posted adjusted earnings of $0.27 per share, well below estimates. Revenue came in at $19.34 billion, missing expectations of $21.11 billion and declining 9% from the $21.3 billion reported in the year-ago quarter.

Automotive revenue dropped to $14 billion in Q1 from $17.4 billion the previous year. Tesla attributed the decline to production line updates at its four vehicle factories for a refreshed Model Y SUV, lower average selling prices, and increased sales incentives. Net income suffered an even steeper decline, plummeting 71% to $409 million, or $0.12 per share, compared with $1.39 billion, or $0.41 per share, in the same period a year earlier.

The disappointing results come during a tumultuous period for Tesla, with its shares down 30% year to date. The company has faced headwinds including Musk’s involvement in the Trump administration, concerns over potential tariff impacts on auto components, and protests in the U.S. and Europe.

Tesla's operating margin contracted to just 2.1%, with the company citing increased expenses related to artificial intelligence projects. Without regulatory credit sales of $595 million, Tesla would have lost money on automotive sales during the quarter.

One bright spot was the energy generation and storage business, which saw revenue jump 67% to $2.73 billion, benefiting from growing demand for grid stabilization and power capacity solutions driven by the need for AI infrastructure.

Looking ahead, Tesla refrained from confirming its 2025 growth targets, stating it will “revisit our 2025 guidance in our Q2 update.” It warned investors about increasing uncertainty in automotive and energy markets due to evolving trade policies and changing political sentiment.

Tesla Stock Short Sellers Rake In $11.5 Billion in 2025

Tesla short sellers have generated massive profits in 2025, with mark-to-market gains reaching $11.5 billion according to data from S3 Partners. This windfall comes as Tesla shares have fallen 30% year-to-date, making it the biggest decliner among tech mega-caps.

Tesla’s business fundamentals have deteriorated, with vehicle deliveries dropping 13% in the first quarter. It also faces increasing competition from lower-cost manufacturers in China and trails behind Alphabet’s Waymo in the developing robotaxi market.

Tesla now ranks as the third most-shorted stock by value, at $17.6 billion, behind Nvidia (NVDA) at $24.6 billion and Apple (AAPL) at $22.2 billion. The significant short position reflects growing skepticism about Tesla’s near-term prospects.

Despite these challenges, Tesla continues to push forward with its autonomous driving ambitions, promising to launch its first driverless ride-hailing service in Austin, Texas, by June 2025.

What Is the Target Price for TSLA Stock?

While Tesla stock may remain volatile in the near term, analysts remain bullish on the EV giant as of April 2025. Out of the 41 analysts tracking TSLA stock, 16 recommend “Strong Buy,” two recommend “Moderate Buy,” 13 recommend “Hold,” and 10 recommend “Strong Sell.” The average target price for Tesla stock is $280.72, below its current trading price.