According to Wolfe Research, Tesla Inc. (NASDAQ: TSLA), is one of the best stocks for shorting this month after a bull market that has gone a bit too far.
The shares of this electric car behemoth could see a steep decline over the next few months, as they are currently significantly overvalued.
Tesla does not offer a dividend, and is therefore unattractive to income investors.
Why would Tesla be a good stock to short?
Wolfe Research believes that Tesla is a good candidate to be shorted as the stock faces significant headwinds by 2025.
The company’s finances are no longer strong enough to justify a high valuation.
In the most recent quarter reported by TSLA, its net profit fell 71% on an annual basis.
Tesla’s annual sales declined for the very first time.
Shares of the EV manufacturer started the year below $240 but ended at over $400 – suggesting that its stock price is not connected to the fundamentals.
BYD gives TSLA a hard time
Wolfe Research has added TSLA to its “short list” of candidates, also due to the increased competition that will be faced by the automaker in 2025.
Cybertruck, the company’s flagship product, hasn’t been a big success. More recently BYD, its fierce rival in China launched a new driver assistance system using DeepSeek AI.
BYD has already been giving Tesla a tough time when it comes to maintaining their supremacy on deliveries. Now, its latest offering dubbed God’s Eye” hints that its plans are to go head-to-head against Elon Musk also in the autonomous driving space.
TSLA will also face a tough challenge from Chinese competitors who are bringing lower priced electric cars to the market.
Tesla Stock Could Crash to $135
Investors are also advised to note that Wolfe Research, at the time of writing, isn’t the only company that has a dovish outlook on Tesla.
Wells Fargo analysts predict that Tesla’s shares could fall to $135 due to increased competition, weaker demands, and margin pressure.
In a recent research report, the researchers said that doubts over the viability and safety of Tesla’s autonomous technology may trigger a steep sell-off.
Steve Westly is a former member of the board at Tesla Inc. He believes that Tesla Inc. may be unable to justify their premium valuation if they don’t introduce a lower-cost vehicle and fully self-driving technologies in all its cars.
In a CNBC interview, he stated that “They are lagging behind Waymo and there is a lot to catch up on.”
The post Tesla named ‘the best stock for shorting’ in 2025 could be updated as new information becomes available.
