Why It’s Too Early to Turn ‘Bullish’ on This Beaten-Down Market Darling
RJ Hamster
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Why It’s Too Early to Turn ‘Bullish’ on This Beaten-Down Market Darling
By Vic Lederman, editorial director, Chaikin Analytics
It’s one of America’s greatest success stories…
Under Elon Musk’s leadership and guidance, Tesla (TSLA) revolutionized the auto industry.
Its Tesla Roadster model, which launched in 2008, was far ahead of anything else in the market. It was the first truly electric sports car. And it sold out months in advance.
By 2012, Tesla introduced the Model S electric sedan. That was also a massive hit.
It seemed as if nothing could stop the company. And by 2018, Tesla’s Model 3 sedan was the world’s best-selling electric car.
Three years later, Tesla’s millionth electric car rolled off the factory floor.
But more than a business success story, Tesla has been a massive investmentsuccess story. Take a look at the below chart of the stock’s performance since the June 2010 initial public offering (“IPO”)…
That’s an incredible move higher over the past nearly 15 years.
But you’ll notice that by now, Tesla’s overall performance since the IPO isn’t as great as it was a few months ago…
Since hitting a record high of about $480 per share in December, Tesla has fallen 41%.
In fact, it’s the worst-performing stock in the “Magnificent Seven” mega-caps so far this year. It’s also among the worst performers in the entire S&P 500 Index in 2025.
And as I’ll explain, a handful of reasons still make me wary on Tesla today…
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Tesla Is Facing Big Challenges
This isn’t the first time I’ve warned about Tesla. Regular readers might recall that I discussed the company last year on January 17, January 31, and July 23.
Turning to why I’m still cautious today… For one thing, Tesla hasn’t been growing the way investors have gotten used to.
Last year was the first year that the company’s sales declined since 2012. Take a look…
Now, I’ll note that the decline was a minimal 1% on a year-over-year basis. But it ended an 11-year streak that delivered an 81% compound annual growth rate.
The trend worsened this year. Tesla reported a 13% decline in global deliveries for the first quarter.
That quarter, the company’s revenues fell about 9% year over year to $19.3 billion. That’s the lowest quarterly figure since the second quarter of 2022.
One reason to explain the decline was the scheduled factory shutdowns. These shutdowns retrofitted factory lines to produce the new Model Y.
Another reason is China. It’s Tesla’s largest market outside of the U.S.
There, business got hit the hardest in the first quarter. And it wasn’t just because of the Model Y-related factory shutdown…
You see, China is the only major market in the world where Tesla isn’t dominating.
As I also noted last year in the January 31 Chaikin PowerFeed essay, Tesla is facing real competition from Chinese rivals like BYD.
And a handful of other brands are constantly vying for customer attention in China. Take a look…
This is the complete opposite of the U.S., where Tesla controls more than half the market. And its nearest competition is just a tenth of its business.
But not all markets outside China can remain Tesla’s playground forever…
Sure, it might always have an advantage on its home turf – the U.S. But other regions are for grabs… especially to the Chinese electric-vehicle (“EV”) brands looking to grow beyond China.
A third reason is the trade war. It has upset a lot of America’s trade partners that Tesla depends on for parts.
For example, Tesla vehicles sold in the U.S. still get between 20% and 25% of their parts from Mexico. But Mexico is facing tariffs from President Donald Trump.
Canada, where Tesla leads the EV market, has slapped 25% retaliatory tariffs on U.S. goods.
Put simply, Tesla is facing challenges in today’s global trade war.
That said, it’s not complete doom and gloom…
As bad as a 41% drawdown has been for Tesla, it’s not unfamiliar territory.
The company has seen its stock decline by 30% or more at least eight times in the past 10 years. Four of those declines saw at least 50% drawdowns.
And yet, Tesla’s share price eventually recovered and went on to hit new highs.
But I’ll take my cues from the Power Gauge. Our system currently gives Tesla a “neutral” rating. And the company has been in “neutral” or “bearish” territory for most of this year.
Tesla has been underperforming the S&P 500 since February. And its share price remains below its long-term trend line.
Put simply, the Power Gauge is flashing caution.
No matter what happens, Tesla is still one of the best success stories out there. But today, the Power Gauge says we can find much better opportunities.
Good investing,
Vic Lederman
P.S. When it comes to those better opportunities, my colleague and Chaikin Analytics founder Marc Chaikin has his eye on something specific right now…
In short, it’s a little-known stock on the verge of a major catalyst that could send it absolutely soaring in the months ahead – and hand massive gains to long-term investors.
As he says, this stock has true “moonshot” potential. Learn more here.
Market View
Major Indexes and Notable Sectors
# HLD: BULLISH NEUTRAL BEARISH
Dow 30
+0.69%
7
16
7
S&P 500
+0.7%
92
273
139
Nasdaq
+1.03%
23
55
22
Small Caps
+1.9%
350
1045
490
Bonds
-1.11%
Industrials
+1.38%
20
36
22
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Industrials
+2.87%
Financial
+2.28%
Information Technology
+2.26%
Communication
+1.82%
Consumer Discretionary
+1.56%
Utilities
+1.23%
Energy
+1.0%
Materials
+0.98%
Consumer Staples
+0.32%
Real Estate
-0.14%
Health Care
-1.83%
* * * *
Industry Focus
Health Care Services
21
31
6
Over the past 6 months, the Health Care Services subsector (XHS) has outperformed the S&P 500 by +7.05%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #7 of 21 subsectors and has moved up 1 slot over the past week.
Top Stocks
CAH
Cardinal Health, Inc
AGL
agilon health, inc.
CNC
Centene Corporation
* * * *
Top Movers
Gainers
AXON
+14.13%
EPAM
+12.88%
ENPH
+12.17%
PAYC
+9.04%
PLTR
+7.85%
Losers
MTCH
-9.58%
FTNT
-8.41%
COR
-6.83%
TAP
-4.54%
MCK
-4.45%
* * * *
Earnings Report
Earnings Surprises
WBD
Warner Bros. Discovery, Inc.
Q1
$0.01
Beat by $0.13
NWSA
News Corporation
Q3
$0.17
Beat by $0.04
EXPE
Expedia Group, Inc.
Q1
$0.47
Beat by $0.11
PODD
Insulet Corporation
Q1
$1.02
Beat by $0.23
NTRA
Natera, Inc.
Q1
$-0.50
Beat by $0.16
* * * *
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