Should You Buy Tesla Stock Before Jan. 2? | The Motley Fool

Tesla ( TSLA 0.46%) stock is on track to end 2025 with a gain of over 25%, and it's currently trading near a record high. Investors have piled into the stock in anticipation of the company's future product platforms, like the Cybercab robotaxi and Optimus humanoid robot, which are both set to launch over the next couple of years. However, over 70% of Tesla's revenue still comes from selling electric vehicles (EVs), and this critical part of its business is suffering from weak demand right now, driven by a sharp increase in global competition. On or around Jan. 2, the company will release its EV delivery numbers for the fourth quarter of 2025, which could help determine the direction of its stock in the near term. Should you invest in Tesla ahead of the report? Image source: Tesla. Two straight years of declining EV sales Tesla delivered 1.79 million EVs in 2024, which was down 1% compared to the previous year. It was the company's first annual sales decline since it launched its flagship Model S in 2011. But the weakness accelerated in 2025, with Tesla's deliveries sinking by 6% year over year through the first three quarters (ended Sept. 30). According to FactSet, Wall Street expects Tesla to have delivered around 450,000 EVs during the fourth quarter (ending Dec. 31). This would take its annual total for 2025 to 1.67 million, representing a 7% decline compared to 2024. Competition is one of Tesla's biggest challenges right now, especially in key markets like China and Europe. Consumers are opting for low-cost options from manufacturers like BYD , which sell EVs at a price point Tesla simply can't match. For example, BYD's entry-level Dolphin Surf EV sells for just $26,900 in Europe, whereas Tesla's Model 3 starts at $44,300. As a result, Tesla's EV sales declined by 12% year over year across Europe during November alone. If we exclude Norway, where sales benefited from the upcoming expiry of an EV tax credit, Tesla's European sales in November were actually down by over 36%. The company's market share across Europe is now just 1.6%, down from 2.4% last year. Tesla stock trades at a ludicrous valuation Tesla's weak EV sales have fueled a steep decline in its profits this year, yet its stock continues to climb, resulting in a sky-high valuation. Based on the company's trailing-12-month earnings of $1.44 per share, its stock is trading at a price-to-earnings (P/E) ratio of 322 as I write this. That makes Tesla almost 10 times more expensive than the Nasdaq-100 technology index, which trades at a P/E ratio of 33. It also makes Tesla the most expensive American stock in the exclusive $1 trillion club -- and it's not even close. TSLA PE Ratio data by YCharts . PE Ratio = price-to-earnings ratio. Based on its valuation alone, it's very hard to make an argument for buying Tesla stock ahead of Jan. 2. Even if the company delivers far more cars than expected, it still...

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