Tesla stock price has remained in a tight range this month as investors wait for the next catalyst. TSLA was trading at $330, 53% above its lowest level this year and 32% below the highest point. This article explores whether it is safe to buy TSLA shares today and whether its valuation can be justified.
Tesla valuation challenge
Tesla’s business is struggling across the board. In the United States, there are concerns that its business will be hit as Donald Trump ends the $7,500 tax credit that has incentivized users to buy electric vehicles.
As we wrote on Lucid and Rivian, there are also lingering concerns that the company will lose millions of dollars from its fuel emissions standard credits. This is an important business that brings in high-margin revenue annually.
Tesla’s Chinese business is facing major challenges as competition from companies like Nio, BYD, Xpeng, and Li Auto intensifies. These competitors have become stronger competitors, helped by the quality of their vehicles.
Tesla has also continued to lose market share in Europe, with its sales in most countries tumbling. Most importantly, some of its products, especially the semi truck and the Cybertruck, are not doing well, with sales falling in the United States.
The most recent results demonstrated how bad Tesla is doing. Its automotive revenue dropped by 16% to $16.6 billion, while it energy generation and storage fell by 7% to $2.7 billion.
The only business that grew was ‘services and other’, whose revenue rose by 17% to $3 billion. This is notable since this segment includes its credits business, that is now at risk.
Tesla’s margins deteriorated, with the operating one falling from 6.3% in Q2’24 to 4.1% in Q2’25.
Analysts expect that Tesla’s business will slow this year, with the annual revenue expected to be $92.78 billion, down by 5% from what it made last year. Its earnings per share will drop to $1.69 this year and then improve to $2.39 in 2026. The EPS in 2026 will be lower than the $2.42 it made last year.
A slowing company like Tesla should have small valuation multiples. In its case, it trades at a forward price-to-earnings multiple of 246, a non-GAAP multiple of 196. In other words, if all factors remain constant, it will take 200 years for Tesla’s profits to hit the current valuation.
Tesla, a slowing automaker, is now more valued than other highly growth companies. For example, NVIDIA, which is dominating in the AI space, has a forward PE ratio of 43, while Microsoft’s forward PE ratio is 33.
One reason why Tesla is so overvalued is that it is betting on the robotaxi industry. While it has made progress on this, succeeding, especially on a global scale, will not be easy.
Tesla stock price analysis
The daily timeframe shows that the TSLA stock price has moved sideways in the past few months. It has remained inside the $300 range since June.
A closer look shows that it has formed a symmetrical triangle pattern whose two lines are nearing their confluence. Therefore, the stock will likely make major moves in either direction in the coming weeks.
A bullish breakout will see it rise to the resistance point at $368, its highest point in June, while a breakdown will see it drop to the support at $274.
Read more: Tesla stock is swerving today: here’s what’s fueling the volatility
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