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Tesla (NASDAQ: TSLA) shares have always been a roller-coaster ride, but never more so than today.
The company’s mercurial founder, Elon Musk, divides investors like never before. After his hook-up with Donald Trump, the hype was up to 11. Following this week’s tariff shock, it’s raced past 12 or 13.
After last November’s presidential election, the Trump-Tesla tie-up excited investors. By 18 December 2024, Tesla stock had flown to a 52-week high of just over $488. As I write, it’s plunged 45% to $267.
Can Elon Musk bounce back from this?
Someone who invested £10,000 at that December peak would be sitting on a 45% paper loss. Their investment would be worth just £5,500 now.
That said, someone who invested £10k on Tesla one year ago would still be up 56%, despite recent volatility. Their shares would be worth £15,600. Which puts the recent dip in perspective.
The big question is what happens next. China has just hit back with a 34% tariff on American imports, sending markets into another spiral. Tit-for-tat retaliation was inevitable, but it’s only making a bad situation worse.
Musk may or may not have distanced himself from Trump, but whether he can ever repair his reputation among Tesla’s more liberally minded customers is another matter.
The anti-Tesla campaign may gather pace as tariffs bite. The outlook for the group’s electric vehicle (EV) business looks tricky, especially as China and Europe are such key markets.
Many argue Tesla has moved beyond EVs and is now all about energy storage, robotics, and self-driving vehicles. That may be true, but will it help if the world decides it’s had enough of Musk?
Latest results, published on 2 April, show sales have slumped to their lowest level in three years.
The company delivered almost 337,000 vehicles in the first quarter of 2025, down 13% year on year. Competition from Chinese rival BYD is intensifying, but Musk’s polarising role in the Trump administration isn’t helping. I can only imagine what Q2 sales will look like.
Highly volatile growth play
Despite the drop, Tesla remains eye-wateringly expensive, with a price-to-earnings ratio of around 131. Hardly a bargain.
The 42 analysts tracking the stock have set a median one-year price target of just over $352. If correct, that’s a hefty 32% jump from today.
Most of those forecasts are out of date, though. Given Tesla’s constant stream of extreme news, nothing can be relied upon.
For years, Tesla has been priced far beyond what its fundamentals justify, driven by the cult of Musk. But now that cult is in danger of imploding. Maybe it’s time for investors to stick to the numbers.
I’ve never owned Tesla shares, though I was briefly tempted to take a punt a few days ago. Musk is the wrong man to write off. If Trump softens his tariff stance, we could see the mother of all market recoveries with Tesla leading the charge.
But anyone buying Tesla stock today has to accept the risks are huge and impossible to fathom. Some have even called for him to quit as CEO. Would that help? Maybe, maybe not.
For many, Musk is Tesla. But for investors, that may no longer be a good thing. In my view, only a pure gambler or true believer should consider buying Tesla shares today.
