Tesla stock (TSLA) has taken a tumble to start the year, as experts fear its market capitalization may soon fall under $1 trillion. The EV maker’s current intraday market cap sits at $1.277T, but is down to open 2025. On Tuesday, TSLA stock shares were down as much as 3%, falling under $400.
One of the reasons behind this fall was a series of revised price predictions for the stock. Recently, BofA Securities analyst John Murphy downgraded Tesla to Hold from Buy. Murphy notes that investor sentiment has “shifted more positively” and “catalysts around future growth drivers have been more fully recognized,” including the potential for self-driving robotaxis. Tesla plans to offer a self-driving robotaxi service in late 2025, and Murphy says the robotaxi business now accounts for about half of Tesla’s valuation.
However, both the EV and self-driving vehicle industries look to be more competitive in 2025. Rivian Automotive, another EV developer, is surging to start 2025, albeit its stock value is far below TSLA’s. Unlike Tesla though, Rivian posted great Q4 numbers for 2024, and has plenty of investor hype in 2025 so far. Google’s Waymo self-driving service is also expected to take a leap in 2025, further challenging Tesla’s models.
Despite his downgrade of Tesla stock status, Murphy still has a bullish outlook on the stock’s price. Murphy lifted his target for the stock price to $490 from $400. The new target implies a gain of about 17% from Monday’s closing price of $411.05.
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Another Analyst Projects Tesla (TSLA) Decline in Early 2025
On the other hand, JPMorgan predicts that profits will evaporate in 2025, a fearful prediction for investors. Specifically, the bank has stated that the EV manufacturer will lose around 40% under the incoming Trump administration. The projection comes amid Trump’s seeking to remove EV tax credits that help incentivize the purchase of Tesla Moreover, the increased risks take place as Tesla has already gotten off to a shaky start to the year. The company reported a drop in annual vehicle sales for the first time in a decade.
“Tesla does not appear to us on track to dominate the global auto industry amidst the electrification transition, which we view as only the starting point for present valuation,” JPMorgan analyst Ryan Brinkman notes.
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One positive factor for the stock this week was an upgrade. New Street Research analyst Pierre Ferragu upgraded shares to Buy from Hold and took his target price to $460 from a recent $240. The $220 difference in target price amounts to some $700 billion in market value.“Growth in autos should re-accelerate with the launch of lower-cost models, and gross margins stabilizing, as Tesla reduces costs as fast as prices,” Ferragu wrote in an investors note. He sees automotive gross profit margins, excluding the benefit of any regulatory-credit sales, improving to almost 16% in 2025 from an expected 15.4% in 2024. That margin came in at about 17% in 2023, and 26% in 2022. It peaked in 2021 at about 26.5%.
However, as mentioned previously, Tesla will still be a likely leader in the automotive market. The industry will be much more competitive though, meaning that Tesla (TSLA) may not be as much of a surefire hit for stock investors as the pre-2025 analysis projected.
