Top 10 Stocks to Watch Ahead of May

4. Tesla Inc (NASDAQ:TSLA)

Number of Hedge Funds Investors: 99

OptionsPlay‬’s Tony Zhang said in a recent program on Schwab Network that Tesla Inc (NASDAQ:TSLA) valuation is still high as the company faces market share challenges across the globe:

“There’s still significant downside from where we currently sit, and this is all on the back of the fact that, you know, the valuations still look incredibly rich, you know, on Tesla, whether you look at it on a multiple of earnings or multiple of revenue. Especially in an environment where deliveries have disappointed, you know, production has fell quite a substantial amount here for Q1, and we’re heading into a market environment that just is quite challenging for the EV market, especially as, you know, the Chinese competitors have continued to eat market share away from Tesla across almost all of the major markets that Tesla competes in, you know, especially Europe, Asia, and now even here in the US and Australia.”

Tesla’s EV sales are falling all over the world as the company faces challenges from competitors. Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.

Things aren’t looking good for Tesla in Europe, either. For example, in Germany, Tesla delivered just 1,429 new cars in February, down 76% from the same month last year. In contrast, battery-electric vehicle (BEV) registrations surged 30.8% during the month.

Tesla (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe.

Aristotle Atlantic Large Cap Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2025 investor letter:

“The underweight in Tesla, Inc. (NASDAQ:TSLA) contributed to performance in the first quarter of 2025. Tesla’s automobile sales declined in the quarter, in part due to factory changeovers that were required for updates to the company’s best-selling vehicle, the Model Y. This resulted in slower sales volume in the quarter. Competition from China’s BYD is causing market share losses for Tesla in several non-U.S. markets. The CEO’s position as an advisor to President Trump has damaged Tesla’s brand image among a cohort of traditional electric vehicle buyers.”