Tesla Inc. TSLA shares fell 2.42% on Monday as investors digested troubling European sales data and a prominent fund manager’s warning about the company’s growth trajectory.
What Happened: Gary Black, Managing Partner at Future Fund, highlighted alarming sales trends in a post on X, noting that April European sales are projected to drop 47% year-over-year. Black emphasized that this decline can no longer be attributed to Model Y production changes.
“We predict that FY’25 Tesla deliveries will be -6% year-over-year versus FY’24,” Black wrote, compared to Wall Street’s estimated 3% decline.
The fund manager expressed concern that Tesla’s current valuation appears disconnected from its projected earnings. He pointed out that the stock is trading at a significantly higher multiple than its historical average, with its price reflecting over 130 times estimated non-GAAP earnings for fiscal 2025 and more than 90 times for fiscal 2026.
In comparison, Tesla’s average one-year forward price-to-earnings ratio over the past three years has been around 76 times.
Why It Matters: Spain exemplifies Tesla’s European challenges, with April sales plunging 36% year-over-year to 571 units, according to industry group ANFAC. Meanwhile, Spanish EV sales overall surged 54%, with Chinese competitors like BYD, MG, and Omoda posting triple-digit percentage gains.
Tesla’s European market share has declined from 2.9% to 2% in just one year amid heightened competition and brand challenges reportedly linked to CEO Elon Musk‘s political activities. The company recently reported the first-quarter results, showing total revenue down 9% year-over-year, with automotive revenue dropping 20% to $13.97 billion.
Despite gaining 23% in April, Tesla shares remain down over 26.11% year-to-date.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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