- - Why Tesla Stock Sank 4.6% Today

Johnny Rice, The Motley FoolDecember 17, 2025 at 1:47 PM

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Key Points -

Tesla faces a potential 30-day sales ban in California if it doesn't change how it markets Autopilot and Full Self-Driving

The stock pulled back Wednesday after hitting an all-time high, with broader AI sector weakness adding pressure

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Shares of Tesla Inc (NASDAQ: TSLA) fell on Wednesday, finishing down 4.6%. The decline came as the S&P 500 and the Nasdaq Composite dropped 1.2% and 1.9%, respectively.

The electric vehicle (EV) maker's stock slid on Wednesday as investors took profits following Tuesday's record high and weighed the news that the California DMV had formally adopted a ruling finding the company misled consumers with its marketing.

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California DMV gives Tesla 60 days to fix misleading marketing

On Tuesday, the DMV announced that it had adopted an administrative law judge's November ruling, which found that Tesla had violated state law by using terms like "Full Self-Driving Capability" and "Autopilot" to describe driver-assistance features that can't operate autonomously. The company now has 60 days to address its use of the misleading language or face a 30-day suspension of its dealer license.

A depiction of a futuristic humanoid robot.

Image source: Getty Images.

The stock was also pressured by continued anxiety in the artificial intelligence (AI) trade that weighed on most of the big tech. Investors reacted to a major financing hiccup in Oracle's massive AI data center build-out -- the latest sign of weakness in the AI market.

Tesla's valuation hinges on robotaxi dreams, not EV reality

Tesla shares hit an all-time high yesterday despite continued significant issues in its core EV business. Investors continue to buy on the hopes that the company transforms itself into a robotics and robotaxi company, ignoring the glaring issues in its EV business.

At this point, these are still just hopes, and Tesla's current valuation just doesn't make sense in my opinion.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle and Tesla. The Motley Fool has a disclosure policy.

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Source: “AOL Money”