Shares of electric vehicle manufacturer Tesla (TSLA) have trailed the broader markets by a significant margin in 2025. The mega-cap stock is down 46% from its 52-week high, valuing the company at a market cap of $833.6 billion right now.
Short Sellers Take Aim at Tesla Stock
The ongoing pullback in its valuation has allowed short sellers to generate profits hand over fist. According to a report from S3 Partners, Tesla’s downturn has triggered a rebound in short interest to 81 million shares. This bearish positioning is now breaking out of a downward trend as negative sentiment grows across Wall Street.
Short interest as a percentage of float has increased by 20%, making Tesla the fourth-largest short interest position by notional value, behind only Nvidia (NVDA), Microsoft (MSFT), and Apple (AAPL). Before the stock’s rapid decline, short sellers had felt squeezed, with short interest touching all-time lows of 2% of float in February.
However, recent activity shows that shorts have added over 15 million shares to their positions. This surge in bearish bets has been profitable, with Tesla short sellers generating approximately $10 billion in profits year-to-date.
Moreover, analyst sentiment on Wall Street has deteriorated. Around a fourth of the analysts covering TSLA recommend selling the EV stock. Data indicates that negative news sentiment correlates positively with rising short interest. As sentiment and fundamentals weaken, bears appear to have gained control of Tesla’s market narrative heading deeper into 2025.
Is Tesla Stock a Buy, Sell, or Hold?
As investors expected a windfall from President Donald Trump’s reelection, Tesla stock was trading at all-time highs in late 2024. However, right now, the pullback in share prices can be partly attributed to CEO Elon Musk’s involvement with the Trump administration.
Moreover, European markets have shown particularly alarming signs. For instance, Tesla sold 1,429 cars in Germany in February, down 76% year-over-year, following a 60% drop in January. Comparatively, overall EV sales in Germany rose by 31% year-over-year. In the first two months of the year, Tesla sold just over 19,000 vehicles, shrinking its market share to 1%.
Deutsche Bank analysts expect Tesla’s Q1 deliveries to be between 340,000 and 350,000 vehicles, down 11% year over year. Meanwhile, Chinese competitors like BYD (BYDDY) are gaining traction in key markets. Notably, BYD has announced plans to manufacture all its European-sold vehicles locally to avoid tariffs, importing only battery cells from China.
Despite these challenges, Tesla’s concentrated U.S. production could become a competitive advantage under Trump’s tariff policies. With all U.S.-sold Teslas manufactured in Texas and California, the company may face fewer disruptions than competitors like Ford (F).
Investors will gain crucial insights when Tesla reports Q1 deliveries on April 2 (expected date), potentially confirming whether recent challenges represent temporary setbacks or signal deeper problems for the automaker.
What Is the Target Price for TSLA Stock?
After a challenging year in 2024, analysts expect Tesla’s adjusted earnings per share to expand from $2.42 to $9.54 in 2029. Wall Street expects its net income margin to improve from 8.6% in 2024 to almost 15% in 2029.
Out of the 41 analysts covering TSLA stock, 16 recommend “Strong Buy,” three recommend “Moderate Buy,” 12 recommend “Hold,” and 10 recommend “Sell.” The average target price for TSLA stock is $334.08, indicating upside potential of almost 25% from current levels.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.