- Tesla is the first Magnificent 7 stock to reclaim its 200-day moving average in 2025, despite a 30% year-to-date decline.
- However, analysts warn the stock is severely overvalued with weak earnings, fading innovation, and growing risks.
Tesla just made history—becoming the first of the so-called Magnificent 7 stocks to reclaim its 200-day moving average in 2025. But beneath that technical milestone lies a troubling reality: Tesla stock remains wildly overvalued, earnings are slipping, and innovation is largely on pause.
The electric vehicle pioneer closed above its long-term average this week, despite being down nearly 30% year-to-date. The rebound seems more like speculative euphoria than a reflection of actual performance. Tesla’s fundamentals haven’t just stagnated—they’ve worsened.
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Redburn Atlantic downgraded the stock, issuing a stern warning to investors. Analyst Adrian Yanoshik projected earnings and free cash flow will fall 10% short of Wall Street’s expectations, citing mounting risks ranging from global tariffs to the potential rollback of U.S. clean vehicle tax credits. Redburn slapped a $160 price target on Tesla—44% below its current price.
Valuation metrics paint an even bleaker picture. With a price-to-earnings ratio of 164x and a price-to-sales ratio above 9x, Tesla is priced like a tech unicorn, not an automaker struggling with demand and competition. For comparison, traditional automakers typically trade at just a fraction of those levels.
And then there’s the innovation drought. The last major product launch was the Model Y in 2019. The much-hyped Cybertruck has been delayed and criticized, and while a cheaper EV model is rumored to launch this summer, Tesla hasn’t released any concrete details.
Investors seem less interested in what Tesla is and more obsessed with what it might become. Much of Tesla’s nearly $900 billion valuation is tied to unproven bets like robotaxis and humanoid robots. But with Full-Self-Driving software still in beta and no commercial rollout in sight, those dreams remain speculative at best.
While Tesla’s return above the 200-day average may excite technical traders, the company’s core business faces serious headwinds. Without new breakthroughs or financial discipline, the stock’s recent rally could turn out to be little more than a dead-cat bounce.
