As we progress through 2025, the financial markets have seen their fair share of ups and downs, with certain stocks experiencing significant setbacks. Among the companies bearing the brunt of market volatility this year are Deckers Outdoor (DECK) and Tesla (TSLA), both of which have emerged as the worst-performing S&P 500 Index ($SPX) stocks thus far. Their sharp declines have prompted investors and analysts to scrutinize these companies more closely, questioning whether their current lows present a strategic buying opportunity or a warning to steer clear.
In this article, we’ll break down the key issues behind the recent weakness in TSLA and DECK stocks, consider their tailwinds and headwinds, and explore if now might actually be the perfect contrarian moment to jump in – or a trap best avoided. With that, let’s dive in!
#1 Worst-Performing S&P 500 Stock: Deckers Outdoor
Deckers Outdoor (DECK) is a casual lifestyle and performance-driven company specializing in footwear, apparel, and accessories. The company’s flagship brands include premium footwear brand UGG and running shoe brand HOKA, but it also markets products under the Teva, Koolaburra, and AHNU names. DECK distributes its products via wholesale and direct-to-consumer channels. Its market cap currently stands at $17.9 billion.
DECK stock demonstrated an outstanding performance in 2024, particularly due to the continued success of HOKA in the running shoe market. However, the stock has plummeted about 42% year-to-date after giving disappointing revenue guidance for 2025 in late January, making it the worst performer in the S&P 500 Index.
The Bull Case for DECK Stock
First of all, Deckers has solid fundamentals, continuing to deliver impressive growth figures. In the most recent quarter, the company’s net sales grew 17.1% year-over-year to $1.83 billion, beating consensus estimates by $100 million. Its GAAP EPS stood at $3.00, marking a solid 19% increase from the same quarter last year and surpassing expectations by $0.39. Sales for the HOKA brand grew 23.7% compared to last year, and UGG, which constitutes the majority of the company’s sales, recorded a solid 16.1% increase in sales. These gains helped offset a decline in the Teva brand and weaker performance in the smaller segments of the brand portfolio. A bright spot for the company was strong international sales, which climbed 28.5% from last year and represented 36% of total revenue, indicating significant growth potential in underpenetrated regions. Finally, the company’s fundamentals are bolstered by a robust balance sheet with zero debt.
It is important to highlight the brand strength and long-term growth potential of HOKA. The brand has consistently gained market share, particularly from Nike (NKE), as well as Adidas and On Holding (ONON), among others. Deckers’ growth in recent years has been driven by strong brand momentum in UGG, but the company’s future success now largely hinges on HOKA’s growth. From its modest $1.1 million acquisition by Deckers in 2012, HOKA sales are projected to reach approximately $2.2 billion in FY25, more than doubling over the past three years. The brand’s innovative and unique designs have resonated with key millennial and Gen Z demographics, contributing to HOKA’s rising popularity. The company is also expanding its apparel offerings to leverage the brand name, further enhancing its growth opportunities. Notably, HOKA plans to launch at least five new iterations across its various franchises in the first half of 2025. With that, the rising interest in HOKA is poised to drive further growth. Also, HOKA’s global expansion is still in its early stages, with significant opportunities for growth in underpenetrated European and Asian markets.
Finally, Deckers Outdoor’s valuation has become much more attractive following the recent selloff. Priced at 19.98 times forward adjusted earnings, the stock trades at a moderate premium to the sector median of 14.93x but looks cheap relative to its five-year average of 24.93x. With that, shares of DECK are highly appealing at current levels, particularly given the company’s outstanding growth.
The Bear Case for DECK Stock
Let’s delve deeper into the reasons behind the company’s post-earnings selloff. On Jan. 31, DECK stock tumbled more than 20% after the shoemaker’s updated full-year revenue guidance failed to impress investors. The selloff came even after the company raised its revenue forecast, now anticipating about 15% year-over-year growth to $4.9 billion in FY25, up from the 12% growth previously expected. However, it fell short of investors’ lofty expectations. Moreover, this figure reflects a sequential slowdown from FY24, when revenue grew 18% year-over-year.
Another key point is that even the revised guidance indicates a relatively weak Q4. A 15% revenue growth projection for FY25 implies fourth-quarter revenue of approximately $967 million, a mere 0.8% increase year-over-year. The last time Deckers experienced such weak revenue growth was in early 2020, at the onset of the COVID-19 pandemic.
It’s also worth noting that a cautious outlook from domestic consumers amid tighter financial conditions and uncertainty surrounding tariffs could pose additional challenges to the company’s growth. Recent weak retail sales data and a decline in consumer sentiment underscore the current fragility of American consumers in the wake of numerous tariff-related headlines.
What Do Analysts Expect for DECK Stock?
Deckers Outdoor stock has a consensus “Moderate Buy” rating. Among the 20 analysts covering the stock, 10 recommend a “Strong Buy,” two assign a “Moderate Buy” rating, and eight suggest a “Hold.” The average price target for DECK stock is $221.06, which suggests huge upside potential of 87.6% from the March 21 closing price.
#2 Worst-Performing S&P 500 Stock: Tesla
With a market cap of about $800 billion, Tesla (TSLA), based in Texas, is dedicated to accelerating the global transition to sustainable energy. The company designs, develops, manufactures, leases, and sells high-performance fully electric vehicles, solar energy generation systems, and energy storage products. It also provides maintenance, installation, operation, charging, insurance, financial, and various other services related to its products. In addition, the company is increasingly focusing on products and services centered around AI, robotics, and automation.
Shares of the electric vehicle maker have dropped 31% year-to-date, ranking it as the second worst-performing stock in the benchmark index. Among the primary reasons for this poor market performance are declining EV sales and CEO Elon Musk’s controversial political influence. TSLA stock was also pressured by the broader market correction, which has taken a significant toll on technology stocks, particularly the Magnificent Seven. On top of that, Tesla dealerships have been targeted in vandalism, and owners have reported incidents of protesters vandalizing their vehicles.
The Bull Case for TSLA Stock
Tesla is making significant investments in robotics, as CEO Elon Musk anticipates these will yield substantial returns in the future. The company is developing Optimus, a humanoid robot designed to automate tasks and assist with labor in manufacturing and labor-intensive industries, aimed at reducing costs and enhancing operational efficiency. During the most recent earnings call, Musk stated that Optimus has the potential to generate revenue exceeding $10 trillion in the long term. Notably, Tesla’s CEO has often described the Optimus program as the “biggest product in history,” setting an ambitious goal to produce 10,000 units of the Optimus by the end of 2025. At the recent GTC Conference, Nvidia (NVDA) CEO Jensen Huang said that human-like robots could become a part of our daily lives within a few years. By incorporating AI into robotics, Huang and other industry leaders envision the emergence of automated robotic assistants capable of “eventually identifying and resolving situations like a human by generalizing from common tasks.” This added a boost of optimism to Tesla’s ambitious project. However, the company’s robot is still in the early stages of learning basic repetitive factory tasks, and its actual value to shareholders remains highly uncertain.
Another promising area for Tesla is its Full Self-Driving (FSD) Robotaxi initiative. Musk believes that once FSD achieves full autonomy, Tesla could launch robotaxi services, potentially opening up a significant new revenue stream for the company. Notably, the robotaxi market is projected to experience rapid growth in the coming decade. Dan Ives from Wedbush believes Tesla’s autonomous and AI-driven initiatives could propel the company’s valuation to $2 trillion. During the Q4 earnings call, Musk announced that the company would launch unsupervised FSD as a paid service in Austin this June. Moreover, a recent report says that Tesla has more than tripled its workforce testing self-driving technology in California, a bullish sign that suggests the widespread adoption of FSD technology may be nearing. Even more exciting, the company recently received approval from California to begin carrying passengers in its vehicles, effectively setting its Robotaxi ambitions into motion.
It is also worth mentioning Tesla’s energy storage business. In this segment, the company primarily provides solar energy generation and storage solutions to residential, commercial, and industrial customers. In Q4, energy generation and storage revenues grew 113% year-over-year to $3.1 billion, driven by higher deployments of Megapacks and Powerwalls. Notably, energy storage deployments reached an all-time high in the quarter. This segment offers a promising diversification opportunity beyond the company’s core EV market.
Finally, Musk reiterated during the Q4 earnings call that the company remains on track to launch a more affordable model in the first half of 2025, with plans to further expand its lineup thereafter. Tesla’s teams in Shanghai are currently developing a modified version of the popular Model Y SUV, with the goal of reducing production costs by 20% to 30%. This would enable the company to enhance competitiveness against Chinese rivals offering lower-cost EV alternatives.
The Bear Case for TSLA Stock
Tesla’s automotive segment faces challenges from declining average selling prices, rising competition, and production adjustments, all of which are affecting its revenue and market share in key regions. In the most recent quarter, its Automotive revenue fell approximately 8% year-over-year to $19.8 billion, mainly driven by lower average selling prices for its S3XY vehicles, following pricing adjustments and discounts aimed at reducing inventory levels. So, the company must roll out new mass-market models to refresh its product lineup and restore momentum in this segment.
It is also important to note that Musk’s focus is divided among his numerous projects, including SpaceX, Starlink, xAI, X, and his latest controversial role as head of the Department of Government Efficiency. With that, Musk’s extensive commitments could spread his leadership too thin, potentially posing a headwind for the company.
Moving on, U.S. President Donald Trump is imposing significant tariffs on various countries and industries. With the April 2 deadline approaching for his reciprocal and sector-specific tariffs, Tesla could become a direct and indirect target of foreign countries. For instance, Tesla might face substantial retaliatory tariffs from Europe and China, both of which are crucial markets for the company.
Another key point is that competition in the robotics space is also intensifying. Rivals such as Agility Robotics have already begun selling humanoid robots to an industrial client, while Boston Dynamics maintains commercial partnerships with several organizations.
Finally, valuation concerns persist despite the stock’s recent sharp drop. TSLA stock currently trades at a forward non-GAAP P/E multiple of 93.03x, well above the sector median of 14.87x. So, Tesla continues to trade at a substantial premium compared to other automotive and even technology companies, which raises another red flag for me.
What Do Analysts Expect for TSLA Stock?
Wall Street analysts maintain a cautious stance on TSLA stock, giving it a consensus “Hold” rating. Out of the 40 analysts covering the stock, 15 rate it as a “Strong Buy,” three advise a “Moderate Buy,” 12 recommend holding, and the remaining 10 give a “Strong Sell” rating. The mean price target for TSLA stock is $338.94, indicating upside potential of 36.3% from the March 21 closing price.
The Bottom Line: Should You Buy the Dip in TSLA and DECK?
Putting it all together, I believe new investors could consider starting with a small position in DECK. Of course, risks remain, but the recent pullback and significantly more reasonable valuation provide a solid margin of safety at current levels.
When it comes to TSLA, while the long-term prospects appear promising due to ongoing investments in AI initiatives such as FSD and Optimus, they are still in their early stages. Moreover, the company’s automotive business will likely remain weak in the short term, and its current valuation remains expensive. Therefore, I do not recommend buying the dip in TSLA stock.
