Tesla Stock To $100?

Tesla (NASDAQ:TSLA) is a fantastic company, and its founder, Elon Musk, is probably the most influential entrepreneur of our times. With almost a trillion dollars in market cap, even after a close to 40% recent decline in Tesla’s stock, it is hard to disagree with a simple fact: Tesla has created incredible value for its shareholders over the long term.

What’s not to love? Here’s the thing: in a downturn, Tesla can lose – no, there is evidence, from as recent as 2022, that Tesla stock lost over 70% of its value over just a few quarters. So, could Tesla’s $280 stock slide to under $100 if a repeat of 2022 were to happen?

Why is that relevant now?

Again, while Tesla might be promising great things with the new Cybertruck, humanoid robots, and new factories, there is a larger risk to the US economy, which is worth factoring right now. What is that?

Sure, inflation fears have subsided, but they are not extinguished. If anything, Trump’s bold moves on tariffs and immigration have stoked fears that inflation could come back. All of this means the US economy could hit a rough spot, and even worse, hit a recession – our analysis here on the macro picture. When you factor in higher geopolitical uncertainty due to bold moves from the new Trump administration, these are critical risks. After all, the Ukraine- Russia war is still ongoing, trade is uncertain, and everyone, including long-term allies Canada, Mexico, and Europe, are now being called to the negotiating table.

Here is the specific data on Tesla that concerns us:

Inflation Shock of 2022

TSLA stock fell 72.7% from a high of $399.93 on 3 January 2022 to $109.10 on 27 December 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500. The stock fully recovered to its pre-crisis peak by 10 December 2024. Since then, the stock has increased to a high of $479.86 on 17 December 2024 and currently trades at around $280

Start of the Covid-19 Pandemic In 2020

TSLA stock fell 60.6% from a high of $61.16 on 19 February 2020 to $24.08 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500. The stock fully recovered to its pre-crisis peak by 8 June 2020.

Tesla stock has been considerably more volatile than the S&P 500 over the last four years. Returns for the stock were 50% in 2021, -65% in 2022, 102% in 2023, and 63% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Overall, it also doesn’t help that Tesla’s stock is still expensive; it trades at almost 10x last year’s sales and close to 120x last year’s earnings. To make matters worse, Tesla revenues didn’t grow much last year, and the consensus estimates point to just about 14% growth this year. So yes, while Tesla didn’t just invent the new EV category, it has energized or jolted – however you see it, the entire auto industry – make sure if you want to hold on to your Tesla stock, that you’re not going to sell it if the stock dives into $200 or $100 levels.

While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? See the last six market crashes compared.

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