2025-04-10T17:10:21.000Z

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In a recent discussion on the Schwab Network, OptionsPlay analyst Tony Zhang expressed a notably pessimistic outlook on Tesla, Inc. (TSLA), unveiling a bearish options strategy that reflects his concerns about the company's future performance in a competitive marketplace.

Zhang's skepticism regarding Teslas stock primarily stems from what he describes as an 'incredibly rich' valuation. He argued that the electric vehicle manufacturer is currently losing market share to its Chinese competitors, not just in international markets such as Europe and Asia, but also within the United States. This shift highlights the increasing pressure Tesla faces as global competition continues to intensify, particularly from companies like NIO, BYD, and others that are innovating rapidly and providing consumers with viable alternatives.

Further compounding these concerns, Zhang pointed out that the overall decline in consumer confidence within the U.S. could negatively impact Tesla's sales performance. He suggested that the broader weakness in the stock market may also hinder the company's share performance. Tesla's Q1 delivery numbers came in significantly below analysts' expectations, which adds to the sense of urgency and concern surrounding the companys financial health.

As part of his bearish strategy, Zhang recommended that traders consider purchasing May 2 put options with a strike price of $255 while simultaneously selling May 2 puts with a $210 strike price. He explained that executing this strategy would involve net premiums of $15 per spread, providing a potential hedge against further declines in TSLA shares.

Looking at Tesla's recent stock performance, the shares have experienced a 2% decline over the last month and a more significant drop of 38% over the past three months. However, its worth noting that over the preceding year, TSLA shares had seen a remarkable increase of 41%, reflecting the volatility that characterizes the tech and automotive sectors, particularly for companies innovating in electric vehicles.

While acknowledging Tesla's potential in the electric vehicle market, Zhang emphasized his belief that artificial intelligence (AI) stocks may present more lucrative opportunities for investors, potentially yielding higher returns within a shorter timeframe. He highlighted a particular AI stock that has seen substantial growth since the beginning of 2025, contrasting it with popular AI stocks that have averaged a 25% decline during the same period. For those interested in exploring investment avenues outside of Tesla, Zhang urged readers to look into this promising AI stock, suggesting that it trades at less than five times its earnings, thus presenting a more attractive investment alternative.

In summary, the insights shared by Tony Zhang on the Schwab Network underline the growing challenges Tesla faces in maintaining its market dominance amidst increasing competition and shifting consumer sentiment. As investors navigate this landscape, they may want to keep an eye on both Tesla's performance and the potential of emerging AI stocks.