Down 20% From Its High, Is Tesla Stock a Buy Right Now?
Key Points
Tesla's sales declined by 3% last quarter.
CEO Elon Musk's long-term vision, however, could give investors reason to stay invested for the long haul.
The stock's valuation remains high despite a sluggish start to the year.
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One of the most captivating growth stocks to own in recent years has been that of electric vehicle (EV) maker Tesla (NASDAQ: TSLA). Its CEO, Elon Musk, is always focused on long-term growth opportunities, which attract plenty of investors who are also bullish on his future vision.
The next big opportunity for Tesla appears to be in artificial intelligence (AI), with robotics and robotaxis being key areas that Musk is now focused on. While EVs are still a core part of the company's business, the makeup of Tesla's financials may change drastically in the future if Musk's vision comes to fruition.
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The market, however, has been pulling back of late. The S&P 500 is down around 2% this year, and shares of many growth stocks are down even more. And despite its potential, Tesla is now down around 20% from the 52-week high it reached last year -- is it a good buy on the dip?
Image source: Getty Images.
The company's financials haven't been looking good of late
Musk may have a rosy outlook for the future for Tesla, with robots and robotaxis generating a pile of revenue for the business, but even under the best-case scenario, that could be years away from being a reality. The more pressing issue today is that its growth rate has been falling, and rising EV competition may only make things worse in the future.
TSLA Revenue (Quarterly YoY Growth) data by YCharts
The company's bottom line has also been underwhelming, to put it mildly. During the last three months of 2025, Tesla's net income totaled just $840 million -- down 61% year over year.
Tesla's stock is still incredibly expensive
Although Tesla's stock may be struggling to start the year, that doesn't mean it's necessarily a cheap buy. In fact, with its price-to-earnings multiple at over 350, there may still be plenty of room for it to fall even lower in the weeks and months ahead.
While investors may have become accustomed to paying a high premium for the stock in the past, it's going to be difficult for that to remain the case if the company's growth remains underwhelming and its profits decline. Paying such a high price for the business will involve taking on a big leap of faith in the company and that its long-term plans will pay off.
But with so much uncertainty and risk around Tesla's future, I wouldn't rush to buy it. This is a highly volatile stock to own, and there are far better and safer growth stocks that can be better options for investors in the long run.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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