This Analyst Thinks Tesla Stock Is Oversold. Should You Buy TSLA Now?

Tesla (TSLA) stock has been navigating company-specific issues as well as broader macroeconomic challenges. The political involvements of CEO Elon Musk, who is leading the Department of Government Efficiency (DOGE), have also weighed on shares. As a result, the stock is down more than 50% from its December 2024 peak. 

Tesla remains a key player in the electric vehicle (EV) market, which saw a record 17.1 million units sold globally in 2024, a 25% increase from the previous year. However, Tesla’s market share has faced pressure due to rising competition, especially from Chinese automakers, and issues like price cuts and production delays. 

Analysts believe that Tesla’s stock is now in “extremely oversold” territory, which could be a good opportunity for investors who think it will bounce back. As Tesla navigates these tough times, its future is uncertain. Will it recover and regain its leadership in the industry, or will it continue to lose ground to competitors? Let’s take a closer look.

Decoding Tesla’s Recent Financial Turbulence

Tesla (TSLA), a pioneer in electric vehicles (EVs), operates with a business model that produces sustainable energy solutions, including EVs, energy storage systems, and solar products. The company has consistently aimed to revolutionize the transportation and energy industries through innovation and scaleability. 

Despite its ambitious vision, Tesla’s stock performance hasn’t been outstanding. Over the past year, shares are up more than 40%. However, year-to-date, it has faced significant challenges, dropping 40% due to concerns about slowing sales and market volatility, among other things.

Tesla’s latest financial results highlight this mixed picture. In Q4 2024, revenue increased slightly by 2% to $25.71 billion but missed analyst expectations of $27.26 billion. Automotive revenue fell 8% to $19.8 billion due to lower vehicle prices. 

Operating income decreased by 23% to $1.6 billion, and net income plummeted 71% to $2.32 billion, partly because of a missing one-time tax benefit present in the year-ago period. Vehicle deliveries also saw their first annual decline totaling just under 1.8 million units for 2024. This performance has led many analysts to reassess Tesla’s growth prospects and question its high valuation.

With a forward price-earnings (P/E) ratio of 92.4x, much higher than the sector average of 15.1x, Tesla’s stock seems expensive compared to its peers. Its high P/E ratio suggests investors expect strong growth, but it also raises questions about whether Tesla can justify such premiums, given rising competition and operational challenges.

However, some analysts see the potential for a rebound. Rich Ross, a technical strategist at Evercore ISI, notes that Tesla’s stock is currently in an “extremely oversold condition.” Ross points out the stock’s Relative Strength Index (RSI) of 32 (at the time of his note), a significant drop from its previous peak of 72. This gap suggests that much of the negative news has already been factored into the stock price. 

Ross adds, “When you have a trillion-dollar company with a 32 RSI and a market cap that has decreased by 55%, that’s an extremely oversold condition. The risk-reward scenario becomes quite appealing given the extreme levels in terms of price and momentum.” 

This analysis offers a counterpoint to the prevailing negative sentiment, suggesting Tesla’s stock might be poised for a potential recovery.

Fundamental Strengths Fueling Tesla’s Future Growth

Tesla’s core strengths are still driving its potential for future growth. In a recent meeting with employees, CEO Elon Musk emphasized the importance of making electric vehicles more affordable. Tesla plans to review its costs to make EVs more accessible, which could help it gain market share and boost sales.

Looking ahead, Tesla is placing a big bet on autonomous technology. Musk announced plans to launch a self-driving option without human supervision in Austin this June, aiming to expand it across many U.S. regions by the end of the year. This push into self-driving could open up new revenue streams and solidify Tesla’s position as a leader in the industry.

Tesla is also investing heavily in robotics. The company plans to scale up production of its autonomous Cybercab and accelerate the development of its Optimus humanoid robot. These initiatives might seem speculative, but they could disrupt multiple industries and create significant value for shareholders.

Another positive area for Tesla is its energy storage business, which set a record with 11.0 GWh deployments in Q4 2024. By expanding beyond electric vehicles, Tesla is protecting itself against fluctuations in the automotive market and tapping into the growing demand for sustainable energy solutions.

These fundamental strengths suggest that Tesla’s current stock slump might be an overreaction. This could support the analyst’s view that the stock is oversold, making it a potential opportunity for investors.

Analyst Ratings and the Road Ahead for Tesla Stock

Analysts have mixed views on Tesla’s future, ranging from cautious optimism to outright concern. The consensus among 40 analysts is a “Hold” rating, with an average price target of $340.33, suggesting potential upside of about 36% from its current price.

Adding to the bearish sentiment, Tesla insiders have sold more than $100 million worth of shares since February 2025, based on current prices. While some sales were planned, others were not, sparking speculation about insiders’ confidence in the company’s short-term prospects.

The Bottom Line on TSLA Stock 

Tesla’s recent struggles have left investors questioning its trajectory, but the company’s core strengths and future ambitions cannot be ignored. While analysts remain divided, with some urging caution and others seeing opportunity in the dip, Tesla’s innovative edge in EVs, energy solutions, and autonomous technology continues to spark long-term optimism. Whether the stock is truly oversold or simply reflecting near-term challenges, one thing is clear: Tesla remains a polarizing force in the market, and its next moves will be pivotal for both its valuation and investor confidence.