Morne Patterson - Understanding Tesla Share Price Volatility

 

The Tesla share price has been a focal point of discussion in 2025, with its dramatic swings leaving investors both intrigued and anxious. As of recent reports, Tesla (TSLA) shares have dropped 50% from their December highs, trading as low as $220 recent from $488 in December representing a decline of 55% over the past 3 months. This volatility has sparked analyses from major firms like Morgan Stanley, Wedbush, and Deutsche Bank, alongside broader internet findings. In this blog, we’ll explore why Tesla is such a levered stock, highlight key insights from various studies, and discuss the role of put options in driving rapid downturns.

 

Tesla Share Price: A Snapshot of Current Volatility

The recent drop in the Tesla share price has erased over $800 billion in market value. This has been driven by a mix of poor sales data, shifting investor sentiment, and external pressures. Wedbush’s Dan Ives and ARK Invest’s Cathie Wood offer bullish counterpoints, but the consensus leans toward caution, with MarketBeat rating Tesla as a “Hold.”

This isn’t Tesla’s first volatile chapter. The stock’s sensitivity to news—be it sales figures, Elon Musk’s actions, or macroeconomic shifts—makes it a high-stakes play. Let’s dive into the factors driving this instability.

 

Why Tesla Is a Levered Stock: Insights from Multiple Analyses

Tesla’s Tesla share price is highly leveraged, meaning small changes in its ecosystem can trigger large market reactions. Here’s a balanced view from various studies:

1. Sales and Regional Performance
   Morgan Stanley highlights a 45% drop in January China sales and a 7% decline in Europe, despite an increase in European EV sales, attributing this to competition and sentiment shifts. Conversely, LiteFinance points to record China sales in Q4 2024 as a potential recovery sign, suggesting regional performance varies widely and levers the stock’s trajectory.
2. Brand and Management Dynamics
   Morgan Stanley observes that the narrative around Tesla follows the Tesla share price—bullish at $800, sceptical at $236. Forbes notes Musk’s political involvement, including his role in the Trump administration, as a risk factor eroding brand trust, with polls showing 53% voter disapproval. Yet, Wedbush’s Ives sees Musk’s influence as a potential catalyst, citing his push for autonomous tech as a long-term strength.
3. Technological Bets and Competition
   Tesla’s leverage hinges on autonomous driving and AI, with Morgan Stanley flagging Full Self-Driving as a growth driver. FSD-enabled Robotaxis were initially unveiled in October 2024 as a bullish signal, but Deutsche Bank warns of production delays and competition from legacy automakers and Chinese EV makers, which could erode margins. This technological uncertainty amplifies volatility.
4. Macroeconomic and Geopolitical Risks
   High interest rates, factory downtimes, and tariff threats (e.g., U.S. plans against Canada and Mexico) are cited as headwinds. Yet, ARK Invest argues Tesla’s vertical integration and battery innovations could mitigate these risks, offering a counter-narrative.

These factors, drawn from diverse analyses, paint Tesla as a stock where every development—sales, leadership moves, tech progress, or global shifts—can swing the Tesla share price dramatically.

 

Analyst Perspectives: A Range of Outlooks

While we won’t predict the Tesla share price, analysts offer wide-ranging scenarios that underscore its volatility:

• Morgan Stanley: In its March report, the firm sets a $430 target with a bull case of $800, citing AI and robotics diversification, despite recent drops. Analyst Adam Jonas sees this as a transition phase.
• Wedbush: Dan Ives reiterated a $500+ target on 7 March (Benzinga), betting on Full Self-Driving and Musk’s political leverage.
• Deutsche Bank: Highlights downside risks, with factory downtimes and competition potentially capping growth, though specific targets are less optimistic.
• ARK Invest: Cathie Wood envisions a $1 400 target by 2027 (Forbes), banking on Dojo supercomputer savings and long-term AI dominance.
• LiteFinance and FXOpen: Forecast ranges of $271-$657 by 2025 and $300-$500 by 2025, respectively, reflecting mixed short-term dynamics but bullish long-term potential.
• Benzinga Consensus: A $329.26 average target from 31 analysts, with a low of $24.86 (GLJ Research) and a high of $550 (Wedbush), suggesting more upside but with significant uncertainty.

These varied outlooks—from bearish cautions to bullish optimism—reflect Tesla’s leveraged nature, where outcomes depend on execution and market conditions.

 

The Role of Put Options: Fuelling Downward Pressure

A critical factor in Tesla’s rapid downturns is the heavy volume of put options. Morgan Stanley hints at this pressure, noting volatility scope, while Forbes describes a “self-fulfilling prophecy” as put holders exercise contracts during declines. Internet findings suggest a surge in puts, though exact figures aren’t quantified. Notable open interest changes have been seen in March, indicating traders are hedging or betting against Tesla.

Put options allow investors to sell at a set price, and when the Tesla share price falls—e.g., the 50% drop since December—exercising these contracts floods the market with sell orders. This accelerates declines, as seen in the seven-week losing streak through early 2025. This dynamic makes Tesla prone to sharp moves, though a sentiment shift could reverse it.

 

Why Tesla Share Price Matters to Investors

The Tesla share price is more than a number—it’s a narrative. Retail investors see it as a bet on innovation, while institutions weigh its AI and EV leadership. Morgan Stanley’s “Top Pick” status contrasts with MarketBeat’s “Hold” rating, reflecting divided sentiment. Forbes warns of diversification risks, citing a Reddit user whose father lost big on a concentrated Tesla 401(k), while ARK Invest touts long-term upside.

 

Final Thoughts on Tesla Share Price Volatility

The Tesla share price remains a volatile enigma. Insights from Morgan Stanley, Wedbush, Deutsche Bank, ARK Invest, and others highlight sales struggles, Musk’s influence, technological bets, and macroeconomic risks as levers. The downward pressure from put options adds another layer, driving rapid drops like the recent 55% plunge.

Investors should approach Tesla with eyes wide open, balancing its innovation potential against its risks. Whether you hold, hedge, or wait, understanding these dynamics is key. Stay tuned to market trends and analyst updates—because with Tesla, change is the only constant.

Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Consult a financial advisor before investing.