Down 25% so far this year, the Tesla (NASDAQ:TSLA) stock outlook isn’t fantastic. The company looks to be at the beginning of a long-term decline as the company loses market share amidst growing competition in the electric vehicle space.
Tesla was the sole mass producer of fully electric vehicles for over a decade. Tesla sold poorly designed EVs at premium prices due to this advantage. If consumers wanted an EV, they had to buy a Tesla; not anymore. As companies ranging from General Motors (NYSE:GM) to Toyota Motor (NYSE:TM) and Volkswagen (ETR:VOW3) scale their own EVs at more affordable prices, Tesla is getting left in the dust.
No Longer ‘Magnificent’
Despite problems at the company, Tesla’s stock and CEO Elon Musk remained unaffected. Despite poor quality ratings, deadly crashes, vehicle recalls, regulatory scrutiny, and social media controversies, TSLA stock continued to rally.
Between 2011 and 2021, TSLA stock increased an astounding 20,250%, rising from just $2 a share on a split adjusted basis to more than $400. Tesla became a leading growth stock that was cheered on by retail investors.
Tesla’s stock performance was so strong that analysts lumped the company in with a group of other mega-cap technology stocks that came to be known as the “Magnificent 7.”
Yet in reality, TSLA stock has trailed the performance of the other Mag 7 that includes Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT). Since hitting an all-time high in November 2021, Tesla’s share price has fallen 54%. In a sign of shifting sentiment. Practically nobody is calling Tesla a top growth stock today.
TSLA Stock Outlook: Losing Ground
Toyota best illustrates the competitive threat that Tesla is facing. The best-selling Japanese automaker plans to be selling 3.5 million fully electric vehicles annually by 2030. Eventually, Toyota plans to convert all of its vehicles to fully electric versions.
Toyota currently sells about 10 million cars, trucks and SUVs a year. Tesla sold 1.85 million vehicles in 2023. In a nice bit of irony, Toyota’s stock is up 25% year-to-date, while Tesla’s share price is down 25% since the start of the year.
While Toyota provides an instructive example, it is one of more than a dozen automakers who are shifting to fully electric vehicles, most of which offer superior quality and lower prices than Tesla.
Tesla’s share of its home market in America fell from 62% to 50% in 2023, a record low. That’s a big loss of market share in a short amount of time, which bodes poorly for the TSLA stock outlook. It looks unlikely to reverse itself as competition intensifies in the coming months and years.
Compounding Problems
Other problems that are pulling TSLA stock lower include an economic slump in China that has hurt sales. There also have been aggressive price cuts and discounts around the world that have hurt Tesla’s margins. Plus, Tesla has failed to introduce any new electric vehicles that are better made and more affordable to buy.
The Cybertruck that went on sale late last year looks interesting, but also seems impractical and has a starting price of more than $60,000. There are rumors that Tesla is developing a new mass market electric vehicle codenamed “Redwood.”
But that new EV is unlikely to be available before mid-2025, at the earliest. Meanwhile, Tesla delivered a dreadful earnings print for the fourth-quarter of last year, and offered grim guidance, with management saying electric vehicle volume growth in 2024 is likely to be “notably lower.”
Sell TSLA Stock
It all seems to have caught up to Tesla and the once seemingly invincible automaker now appears to be vulnerable. The company is no longer able to get by on a lack of competition. Demand has weakened, market share is in freefall, and margins are being eroded.
The company’s management team seems to lack creativity and new products have failed to inspire. With the share price sinking, investors would be smart to take any profits they have and get out now. TSLA stock is out of juice.
On the date of publication, Joel Baglole held long positions in NVDA and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.