Once hailed as the undisputed champion of the electric vehicle revolution, Tesla’s stock has faced a brutal reckoning in 2025, shedding billions in market value as investor optimism collides with harsh realities. The company’s stock has plummeted 50% from its December 2024 peak, marking nine consecutive weeks of decline. The shares, which rode a years-long wave of euphoria fuelled by Elon Musk’s visionary promises and breakneck growth, have tumbled amid a perfect storm of challenges.
This article will dissect the multifaceted collapse of Tesla’s stock price, exploring how the convergence of overhyped expectations, operational missteps, and market shifts have exposed the vulnerabilities beneath one of history’s most polarising market darlings.
Sky-high valuation
For years, Tesla has soared on the wings of investor euphoria, trading at stratospheric multiples that dwarfed those of legacy automakers—a disparity that defied traditional valuation logic. As at 31 December 2024, Tesla’s price-to-earnings (P/E) ratio eclipsed 197, a figure that starkly contrasted with the single-digit P/E ratios anchoring industry stalwarts like Toyota (10.81) or Ford (6.78)….
