Tesla Faces 'Epic' Short Wave as Analyst Warns 93% Plunge to $25

Tesla (TSLA) has become the market's focal point after dropping 25% year-to-date, with GLJ Research founder Gordon Johnson predicting further declines and reaffirming his $25 price target — a 93% plunge from last Friday's closing price of $348.95. The strategist's latest comments underscore deep concerns about Tesla's valuation: despite declining sales, the market continues to harbor overly optimistic growth expectations that Johnson argues are unsustainable.

Tesla's forward price-to-earnings ratio of about 175 times is at the heart of the bearish view. Johnson said that Tesla's ability to keep these high prices depends a lot on CEO Elon Musk's tendency to talk about big ideas. Many of these ideas haven't come true yet, but they are already priced into the stock. Tesla's disappointing release of its robotaxi service has made investors even more worried, as delays have shown that the company may not be able to reach its lofty goals as soon as markets thought.

What the Bears Are Saying: From $25 to $14

Johnson isn't the only one who is negative. Ryan Brinkman, an analyst at JPMorgan, has kept his "Underweight" rating and lowered his price goal to $145. He says investors should be "highly vigilant about risks stemming from persistently contracting profit margins."

There are now more angry voices. According to Clean Energy Transition's Per Lekander, Tesla is "the biggest bubble in modern history," and the price could fall as low as $14. There is a growing group of short sellers putting unprecedented pressure on Tesla to change its valuation in 2026. This is true even though Tesla supporters like Dan Ives of Wedbush Securities still believe that advances in AI and Optimus robots will change the company's value.

The market for options has slowed down a lot. The crazy increase in focused options trading that happened in 2021 has decreased as stock prices have gone down. Johnson says this is because Tesla's stock price is very volatile, which is one of the main reasons for the recent long-term drop.

The Valuation Disconnect: 323x P/E vs. $254 Fair Value

There is a stark story in the numbers. GuruFocus says Tesla's stock is 37.3% overvalued at present prices, as its fair value is $254.24. The company's P/E ratio for the last twelve months is 323.1, which is much higher than the norm of 107.37 over the last five years. This difference makes me wonder if the market has priced in growth forecasts that are too high.

In 2025, Tesla shipped almost 1.6 million cars around the world. The company is a $1.31-trillion market cap vertically integrated electric vehicle (EV) manufacturer and AI software developer. The lineup includes high-end sedans, mid-size sedans, crossover SUVs, and robot taxi services that are still in the works. It also includes energy options like solar panels and storage. But the number of deliveries and the value multiples are not matching up.

Insider Activity: The $20.9M Signal

Insiders have sold about $20.9 million worth of shares in the last three months. This trend could mean that business executives don't think the stock will do well in the future, or at least they think that the current prices are a good time to get out. Insider selling, falling stock prices, and growing short interest all work together to make a feedback loop that puts pressure on valuation.

Investor Takeaway

The price of Tesla stock right now is $348.95, which is 37% above its calculated fair value and 1,296% above Johnson's $25 goal. The 175x forward P/E assumes growth paths that falling sales and late robotaxi rollouts are not supporting. Insiders selling $20.9 million worth of shares shows that they are not buying the dip.

GuruFocus thinks Tesla is worth $254, which is 27% less than its present price but still a lot of money compared to other companies in the same situation. JPMorgan wants to reach $145. Johnson has $25 in his bear bag. $14 is the result of Lekander's bubble call.

The robotaxi schedule is like a clock for the trade. Keep an eye on Musk to see if he gives firm delivery dates for the self-driving car service and if the bears' doubts are proven correct by further delays. The gap between having a plan and carrying it out has never been bigger. The people who are selling short are betting that it will close down.