Tesla's stock has declined 25% year-to-date, and a Wall Street strategist anticipates further losses before the year concludes. Gordon Johnson, Founder and CEO of market research firm GLJ Research, has maintained a bearish stance on the electric vehicle manufacturer led by Elon Musk for years and continues to hold this view.

In a recent interview, Johnson discussed his rationale for shorting Tesla's stock, explaining the basis for his $25 price target—implying a 93% drop from last Friday's closing price. He stated, "I believe Tesla will become the most successful short case in stock market history."

His perspective aligns with other Tesla bears, including veteran fund manager George Noble, who recently characterized Tesla as the stock market's largest bubble. Johnson's primary concern revolves around Tesla's elevated valuation, trading at approximately 175 times forward earnings, while the company's sales continue to decrease.

"At the current price, the market is pricing in explosive growth for Tesla, but the reality is quite the opposite," he remarked. "This indicates the stock is significantly overvalued." Johnson attributes Tesla's high valuation to Musk's history of making exaggerated promises about Tesla's products, which often get priced into the stock before the vision materializes.

He added that the slow rollout of Tesla's robotaxi service has been disappointing. Johnson believes that each day Tesla delays expanding its robotaxi fleet, investors grow concerned that the company is failing to deliver on Musk's commitments.

However, Johnson contends that Tesla's challenges extend beyond delays in robotaxi business expansion. In a recent report, he examined options trading activity for Tesla stock, highlighting concentrated trading that emerged in 2021 but has since diminished, with options volume declining alongside the falling share price.

Johnson suggests this pattern is directly linked to Tesla stock's high volatility and recent consecutive declines. He further noted that if his assessment of waning, options-driven upward momentum is correct, Tesla will revert to trading on fundamentals, which he believes would drive the share price down to around $25.

"From a fundamental perspective, Tesla is in a structural decline with negative earnings growth," he explained. "If any of the other major tech giants faced similar fundamental headwinds, their stock prices would be severely impacted."