The Tesla (NASDAQ:TSLA) share price keeps testing new lows in 2025. And despite US Commerce Secretary Harold Lutnick saying the stock “would never be this cheap again”, last week it’s got even cheaper.
While some analysts have argued that Trump’s tariffs are more detrimental to other vehicle manufacturers than Tesla, Elon Musk’s company hasn’t received setback after setback in recent weeks.
So with this is mind, some investors will be asking where the floor is for Tesla. One analyst says the stock should be trading closer to $120. That’s 45% below the current share price.
Not JP Morgan’s favourite
In March, before these tariffs were brought in, JP Morgan analyst Ryan Brinkman reduced Tesla’s price target from $135 to $120 while maintaining an Underweight rating on the stock.
This adjustment reflects a significantly lower forecast for vehicle deliveries and potential pricing challenges. The firm attributes these issues to shifting customer sentiment, as both current owners and prospective buyers are reacting in diverse ways, such as protesting at Tesla stores, boycotting sales, and reselling vehicles in the secondhand market.
The banking giant also highlighted CEO Musk’s controversial political role as a senior advisor to the President as a reason for this backlash. Interestingly, Tesla actually underperformed JP Morgan’s delivery expectations for the first quarter. The real figure of 336,000 was well below the bank’s estimate of 355,000.
Of course, what remains phenomenal about Tesla is that even at $120 per share, the stock would be trading at 50 times earnings. That’s in line with Ferrari, but still many times greater than other car manufacturers.
Not a car company
Tesla’s often misunderstood as a car company, but its valuation and ambitions suggest it’s much more. It wants to be seen as a technology platform with transformative potential across artificial intelligence (AI), autonomous driving, and robotics.
While electric vehicles (EVs) currently dominate Tesla’s revenue, Musk’s consistently emphasised its broader technological aspirations. This includes Full Self-Driving (FSD) and humanoid robots like Optimus.
Tesla’s AI capabilities underpin its autonomous driving efforts, relying on neural networks trained on data from millions of vehicles. Unlike competitors such as Waymo and Cruise, Tesla avoids costly LiDAR technology, focusing instead on camera-based systems and fleet learning.
This camera-based approach enables continuous improvement in real-world driving scenarios. The goal is for the upcoming robotaxi to redefine urban mobility, offering substantial margins by replacing traditional taxi services and ride-hailing platforms. Likewise, Optimus robots aim to revolutionise factory operations and potentially open new revenue streams across industries.
However, the risks are significant. Tesla’s reliance on camera-based systems for autonomy has drawn scepticism from experts who favour LiDAR for safety and precision. Moreover, rivals like Waymo have gained a headstart with driverless taxis already in operation, which could erode Tesla’s competitive edge.
As such, if Tesla fails to deliver on its bold promises — whether in autonomous driving or robotics — it risks being perceived as overvalued. It’s an incredibly hard stock to value. But for me, they’re no doubt that if its AI ventures don’t deliver, it could trade at $120 or below.
I could be very wrong and Tesla has a way of defying expectations. But I’m not buying the stock in the near term.
This post was originally published on Motley Fool
