Cathie Wood believes Tesla Stock will rise. Here is the reason why a crash is much more likely.

At ARK Invest with bold bets on transformative technology shares such as. Tesla (TSLA 4.66%))). It has collected billions of dollars of investor assets by promising high growth by focusing on innovation.

Their recent prediction is that Tesla increases to 2,600 US dollars per share, which would bring its market capitalization almost 10 trillion dollars.

Today it is around 275 US dollars. Wood and other investors are optimistic about the stock. However, if we look under the bonnet (or the suitcase?), The picture is much darker. Here is the reason why the share will soon increase a price of $ 2,600 than to achieve a price of $ 2,600.

Market share drops

With the creation of electric vehicles (EVS), which took the market share of combustion engine vehicles, Tesla was able to expand its business to a sales of almost $ 100 billion to one of the fastest prices in history.

In the last quarters, this growth has slowed the great time. The market share of Tesla in the United States as a percentage of the SEVs sold in the first quarter of 2022 to 43.5% in the first quarter of 2025 from 75%.

While this market share still has the market provider, this weakening of the market has been strongly affected, which decreased by 20% in the last quarter compared to the previous year.

It also occurred outside the United States. In China, local players Tesla have dust in dust, while the European players defend new models that are coming onto the market.

Even if Tesla significantly reduces its sales prices for customers, the company has no longer grown in the last quarters, which affects its profit margins. The gross margin fell from almost 30% to less than 18%, while the operating margin has increased from 16% to 7.4% in the past 12 months. If the current trends remain, these metrics will remain in the wrong direction.

Fast energy growth, speculative bets with new projects

A strong part of the Tesla business is its Energy Pack segment, which rose to 2.73 billion US dollars in the last quarter by 67% compared to the previous year. These battery packs are used via the electrical network to create more stable energy systems for supply companies around the world. Commercial customers and even individuals can also use these products.

The growth of Energy Packs is great, but for a company the size of Tesla with a market capitalization of over 800 billion US dollars is not sensible. This segment has low gross rods and a limited addressable market, since these are mainly backup solutions for electricity generation in times of needs. Elon Musk gives a reason why CEO Elon Musk does not project major income from this segment in the near future.

What does the CEO talk about? Mainly autonomous vehicles and the Optimus Humanoid robot. Tesla has built up his research on these two fields for many quarters. For a decade, Tesla has been claiming for his self -driving robotaxis that the technology will soon be ready for human use, but it has not yet arrived.

Do not keep your breath away that it will happen in 2025. The humanoid robot project is something that Musk believes that annual turnover can generate trillion dollars, but it has not achieved a functioning prototype.

If these two segments are the future of the company, investors have to wait patiently for profits to bear fruit if they ever come.

TSLA business mark data (TTM) from Ycharts; Ttm = 12 months follow.

Tesla's overvalued stock price

If you look at Tesla's share price, it is clear that the company with its colleagues, the “great seven” and the broad market in general acted a bonus.

It has a price-to-profit ratio (P/E) of 151. The width S&P 500 Business at a P/E between 20 and 30. The other great seven stocks deal with P/E relationships closer to 30, 40 or 50.

Car manufacturers usually act with a P/E of 10 or below. Tesla looks very overvalued, no matter how they cut it into slices, especially if his income now falls around the world.

Management can continue to dangle the carrot of new prototypes to satisfy the shareholders. Cathie Wood may still have a price target of 2,600 US dollars. However, smart investors know that a stock follows its basics in the long term, which is why the Tesla share at the current level falls much more often than in the case. Do not buy it for your portfolio today.