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Ross Gerber Predicts Tesla Shares Could Decline by 50% in 2025

Ross Gerber, a prominent figure in the investment community and an early investor in Tesla, has grown increasingly vocal regarding his concerns about the company and its CEO, Elon Musk. He has recently made headlines by selling off a significant portion of his Tesla shares.

During a recent interview, Gerber articulated four reasons for his prediction that Tesla’s stock may tumble by as much as 50% within the next year. This statement of bearish sentiment is not new for Gerber, who has openly expressed his skepticism regarding Tesla’s current trajectory.

Last year, he disclosed that he had divested approximately $60 million in Tesla shares, driven by concerns that interest in the company’s vehicles was waning. Furthermore, he commented on the limited positive impact Elon Musk’s political visibility would have post the recent elections, suggesting that any such benefits would be negligible.

Since Gerber’s warnings, the performance of Tesla shares has indeed taken a hit, dropping 16% in 2025 and showing a 4% decrease since Gerber’s December remarks. His outlook on the company’s valuation and future growth remains cautious, highlighting familiar concerns surrounding financial metrics, autonomous driving technology, and Musk’s unconventional management style.

In his recent commentary, he underscored several reasons why he believes Tesla may face a challenging year ahead:

Ambitious Targets and Technology Limitations

Gerber claimed that Musk’s ambitious goal of launching an autonomous taxi network in Austin by June is impractical. He believes that the push for rapid advancements in autonomous driving could lead to unmet expectations and stock depreciation.

He emphasized that Tesla’s current self-driving technology relies heavily on cameras rather than LIDAR sensors, a contrast to competitors like Waymo, which he considers to have a more reliable approach. Gerber fears that without transitioning to a more advanced hardware framework, Tesla may struggle to enhance its autonomous capabilities.

Musk’s Distractions and Their Impact

Gerber expressed concern over Musk’s evident shift in focus towards artificial intelligence and other ventures, which he believes detracts from Tesla’s developmental priorities. “If his attention were solely on full self-driving, I would feel more confident,” he stated, indicating that Musk’s divided interests pose a significant risk to shareholder confidence.

Market Competition and Sales Slowdown

Despite the buzz surrounding Tesla’s futuristic projects, the company’s primary revenue source—electric vehicle sales—may be at risk due to increasing competition, particularly from BYD, a Chinese EV manufacturer. Gerber noted that many countries are rallying behind domestic brands, which could threaten Tesla’s market presence beyond the United States.

Compounded by the recent decline in Tesla vehicle sales worldwide, concerns about ongoing interest in its offerings continue to grow. Reports indicate that Tesla experienced its first annual slowdown in EV sales last year; management was optimistic about returning to growth despite these challenges.

Market Sentiment and Valuation Concerns

Tesla’s stock has historically commanded high valuations compared to traditional automakers, but ongoing sales declines could pressure those premiums. With a market capitalization of $1.1 trillion, Tesla far surpasses competitors like Toyota, despite contributing only a fraction of the profits. Its forward price-to-earnings ratio of 118x raises additional red flags for investors anticipating a downturn.

Gerber’s conclusion is sobering: “If the situation continues to worsen, the stock could drop by 50% this year.” This sentiment reflects growing caution among investors, as evidenced by JPMorgan’s recently bearish stance and its conservative price target of $135 for Tesla, suggesting a possible 60% downside.

As Tesla navigates these turbulent waters, Gerber’s analysis and insights may resonate with both investors and industry watchers keen on the company’s future direction.

For further details, you can read the original interview on Business Insider.

Source
finance.yahoo.com