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Is Tesla a buy at 33% off its peak?

February 11, 2025

Is Tesla a buy at 33% off its peak?

No. We expect that Tesla will lose 40% in valuation relatively soon. 

Tesla Inc. (TSLA) had another awful day today, losing 6.3% from its previous close. TSLA has declined approximately 33% since its peak on December 8, 2024. Tesla achieved an all time intraday high of $488 on December 8, 2024 just a little over two months ago. TSLA closed today at $328.50 per share, reflecting a 33% decrease from its peak valuation.

We are surprised. Although Creatix predicted Tesla's fall and is holding a symbolic short sale position against Tesla on the Creatix fund, it is surprising to see such a dramatic fall in just a little over 2 months. Tesla's capitalization stands at approximately $1.057 trillion, having lost about half a trillion ($500,000,000,000) in 66 days (about $7.6 billion per day in average).

Creatix believes that Tesla will continue falling down. Our target price for Tesla is $199 per share, reflecting a pending decrease of 40% from today's price. At that price, Tesla will be back to its August 2024 valuation, which was still handsomely high. The fact is that Tesla experienced a completely artificial and unjustified valuation increase after Elon Musk endorsed Donald Trump and became an investor in the re-election campaign of our American Christ. 

Although Tesla and Musk kept a positive momentum for a full month after the election, eventually the political bubble began to deflate. Musk became a government official and his popularity has decreased dramatically. The fossil fuel economic plan of the Trump administration is also very much adverse to Tesla as an electric car and electric battery company. 

Below are some reasons for Tesla's ongoing debacle.    

1. Politics. 

Elon Musk's active engagement in political matters, particularly his support for former President Donald Trump and far-right figures, has led to negative perceptions among consumers. This association has adversely affected Tesla's brand image, especially in Europe, where sales have seen significant declines. Financial analysts have adjusted their outlooks on Tesla. For example, Stifel analyst Stephen Gengaro lowered his price target from $492 to $474, citing unfavorable public opinion and mixed fourth-quarter results. He also expressed concerns about Musk's political activities affecting Tesla's image. Our price target is $199.

2. Declining Sales

Tesla has experienced substantial sales drops in major European countries. In January 2025, sales decreased by 63% in France and 59.5% in Germany compared to the previous year. Similar downturns occurred in the UK and Scandinavian countries. Additionally, in China, Tesla's sales fell by 11.5%, while local competitor BYD saw a surge in sales.

3. Neglect 

Investors are apprehensive about Musk's involvement in multiple ventures. Besides working 80 hours on politics, Musk is also bidding to take control of OpenAI. This move raises concerns about potential distractions from Tesla's operations and questions about how such acquisitions would be financed. Past acquisitions, like Twitter, led to significant Tesla stock sales by Musk, contributing to stock price declines.

4. Tariffs

The broader automotive industry faces uncertainties due to proposed tariffs and trade policies. While Tesla's U.S.-centric production offers some insulation, potential counter-tariffs from countries like Canada and Mexico could impact earnings from sales in those regions. 

5. Incentives.

The potential reduction or elimination of federal incentives for electric vehicles (EVs) could have significant implications for Tesla. Federal tax credits, such as the $7,500 incentive, have historically made EVs more affordable for consumers. Removing these credits could increase the effective purchase price, potentially reducing demand, especially among price-sensitive buyers. Higher upfront costs without incentives might deter new customers, slowing the adoption rate of Tesla vehicles. The suspension of programs like the National Electric Vehicle Infrastructure (NEVI), which provided funding for EV charging stations, could slow the expansion of charging infrastructure. This might affect Tesla owners' convenience and the broader appeal of EVs. 

Based on the above and our ultra biased opinion against Tesla, we recommend to stay away from the stock. We believe that it is a good time to sell it and run. Yet again, we are short on stock and stand to make a profit if the company continues failing. 

Now you know it.

www.creatix.one 

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