Tesla (NASDAQ:TSLA) stock has faced a rough ride in 2025, with shares sliding sharply before staging a recovery in recent months – yet still leaving investors down about 15% year-to-date. At the heart of this downturn is a slowdown in EV sales, pressured by intensifying competition – particularly from Chinese rivals – and a tarnished brand image fueled by CEO Elon Musk’s constant forays into politics.
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The sales trend has been moving in the wrong direction for some time: Q2 2025 marked the second straight year-over-year decline, and even the ever-optimistic Musk conceded that the company could be in for a “rough” couple of quarters.
While that’s a sobering admission, Tesla’s future isn’t devoid of promise. The company is working on multiple ambitious fronts, from full self-driving technology to autonomous robots and AI initiatives. But whether Tesla is actually on the right track to capture those opportunities is a point of contention.
One top investor known by the pseudonym Noah’s Arc Capital Management is worried that Tesla is not positioning itself to take full advantage of these vast opportunities.
“Tesla’s growth momentum has faltered, and this downturn was more than just a blip,” explains the 5-star investor, who is among the top 2% of TipRanks’ stock pros.
It is not just the slowing EV numbers that have Noah’s Arc up in arms, but a lack of discipline that the company seems to be demonstrating. The investor is anxious to see Tesla focus more on full self-driving, believing this to be the big money maker going forward. Instead, Noah’s Arc is dismayed that Musk is chasing political sideshows and marginal business ventures (such as the Tesla Diner).
“His attention is divided among so many different endeavors, and Tesla is only getting a small share of that,” adds Noah’s Arc. That’s never an ideal scenario, but it becomes even more damaging when the company’s full self-driving ambitions remain far behind Alphabet’s Waymo.
And yet, even with the most recent drop in share price, Tesla continues to trade at a “stretched” valuation, with a Forward Price-to-Earnings multiple north of 190x. This, according to Noah’s Arc, leaves nary any “margin for error.”
“I’m double-downgrading Tesla from strong buy to hold due to Musk’s distractions and operational risks outweighing prior bullishness,” sums up Noah’s Arc. (To watch Noah’s Arc’s track record, click here)
That’s right around where Wall Street finds itself as well. With 14 Buy, 15 Hold, and 8 Sell ratings, TSLA has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $307.23 implies ~11% downside from current levels. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.