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CNBC
4 hours ago
- Automotive
- CNBC
Here's what Wall Street thinks about Tesla's second-quarter results
Wall Street ratings were a mixed bag after Tesla's second-quarter financial results. Tesla on Wednesday reported a second straight quarter of declining automotive sales , which came in at $16.7 billion for the period, down from $19.9 billion in the same quarter last year. The company also missed on top and bottom lines. Shares of the electric vehicle maker plunged 6% in premarket trading, piling on its roughly 17.7% year to date loss. Tesla has struggled in key markets such as China and Europe and notably lost market share to Chinese companies that have released lower cost EV models. Still, analysts have a wide range of ratings and price targets on Tesla shares. It's a company that bulls tend to stick by for its future value in technologies such as robotaxis, not necessarily its near-term innovation. Analysts polled by LSEG have a consensus price target on Tesla that implies more than 9% downside for Tesla shares. Of the 54 analysts covering the stock, five rate it a strong buy, while 19 rate it a buy and 20 maintain a hold. Ten have an underperform or sell rating on shares. Here's a look at what some Wall Street majors said after the EV maker's earnings release: Goldman Sachs keeps neutral rating, lifts price target to $300 Analyst Mark Delaney raised his 12-month price target to $300 from $285. He said he expects Tesla's revenue growth and profits to improve in 2026, but is keeping his 2025-2027 estimates below the FactSet consensus. "We believe a key focus for investors going forward will be the ability for revenue and profits to reaccelerate driven by Tesla's AI enabled products (e.g. robotaxis, FSD) and new vehicle launches against a more difficult policy environment and given competition," Delaney said in a Wednesday note. "Management did note the potential for the end of IRA EV purchase incentives in 4Q to temporarily pressure fundamentals, but the shift to AI enabled products including robotaxis/FSD and Optimus would be a substantial long-term driver." Wells Fargo reiterates underweight rating, $120 price target Wells Fargo sees major room for downside ahead. Analyst Colin Langan's price target implies Tesla shares stand to lose nearly 64% from their latest close of $332.56 per share. Tesla shares are down in post-earnings trading "despite a Q2 op margin beat as fundamentals look worse into 2H. TSLA did not provide new delivery guidance & warned of added pressure from tariffs, IRA & OBBB. We agree with 2H concerns & remain UW," Langan wrote in a Thursday note. He remains cautious on robotaxis, even after CEO Elon Musk's bullish commentary that robotaxis will "probably address half the population of the U.S." by year-end, and that Tesla expects an Optimus 3 prototype by the end of the year to scale next year. Langan said that scaling robotaxis and Optimus humanoids could take longer than expected, which he believes raises risks as Tesla's core business weakens. Morgan Stanley maintains overweight rating, $410 price target Analyst Adam Jonas is a well-known Tesla bull. He reiterated Tesla as a top pick and kept a target price that implies about 23% potential upside. Still, Jonas lowered his fiscal year 2025 earnings per share expectations by 14% compared to prior forecasts, mostly driven by lower deliveries and higher operating expenses. "2Q numbers were a slight beat with FCF near break-even. Tesla is crossing the chasm to autonomy while absorbing slower volume, EV incentive elimination, tariffs and investing in new initiatives that may not make margins for years," Jonas said in a note about Tesla's results. "Our OW rating and $410 price target are underpinned by our belief that Tesla's capabilities in key areas of physical AI ... offer growth and margin opportunities that greatly exceed those of the traditional EV business, which is under pressure," he added. "we struggle to think of any other company as well positioned as Tesla in terms of data, robotics, energy, AI, manufacturing and supporting infrastructure Bank of America reiterates neutral rating, $341 price target Analyst Federico Merendi anticipates "rough quarters ahead" for Tesla, echoing Musk's commentary. His neutral rating on the stock relies on Tesla's current market advantage in autonomous driving initiatives and physical AI applications, he said. "Tesla commentary on future developments in terms of real-world AI (Autonomous vehicles/robotaxi and Optimus) remains bullish. However, the company is facing challenging times," he wrote in a note to clients. "Commentary also suggests that the tariff impact may increase in the future. However, by end of 2026, management thinks that Tesla's economics will be compelling with autonomy at scale." Evercore ISI maintains in-line rating, $235 price target Analyst Chris McNally expects Tesla's third-quarter results to see the downbeat effects of slower EV launches and tariff impacts. "The LT negative EPS revision trend has continued, unabated," he said in a note. "We believe there will be a sharper cons move post Q3."
Time of India
6 hours ago
- Automotive
- Time of India
Tesla faces turbulent quarters as US cuts EV incentives; Musk bets big on autonomy
Tesla is bracing for a few "rough quarters" ahead as reduced government support for electric vehicles in the United States threatens to dampen sales, CEO Elon Musk said during the company's Q2 earnings call on Wednesday. Shares of the electric carmaker fell nearly 5 per cent following the remarks, which reflected concerns about slowing demand and delayed production timelines, as per Reuters. The electric vehicle giant posted its worst quarterly sales drop in over a decade, with revenue falling 12 per cent year-on-year to $22.5 billion for the April–June period, below analyst expectations of $22.74 billion, according to LSEG. Adjusted earnings per share came in at 40 cents, missing the 43-cent consensus. Sluggish sales and lower subsidies cloud outlook Tesla's vehicle deliveries declined 13.5 per cent in Q2, despite the release of an updated Model Y, its best-selling SUV. Compounding the pressure, US tax credits of up to $7,500 for EV buyers are set to be scaled back later this year under President Donald Trump's administration. The company's automotive regulatory credit revenue also dropped sharply—down 51 per cent —impacting both its top line and profit. These credits are sold to other automakers struggling to meet emissions targets. Despite the earnings miss, Tesla's automotive gross margin (excluding regulatory credits) stood at 14.96 per cent , slightly above expectations, helped by cost reductions in manufacturing. Affordable EV delayed, autonomy remains key bet Musk acknowledged that Tesla's more affordable EV, initially planned for release by mid-2025, would see slower-than-expected production ramp-up. Chief Financial Officer Vaibhav Taneja said limited volumes had been produced by the end of June, but the company stopped short of offering a timeline for wider rollout or disclosing key specifications. In a moment of levity during the call, Musk jokingly described the vehicle as 'just a Model Y,' hinting at a stripped-down version of the existing SUV. The real focus, however, remains on Tesla's long-term push into autonomous mobility. The company is banking on revenue from its Full Self-Driving (FSD) software and a future robotaxi business, with volume production of its custom-built Cybercab expected in 2026. A small trial of robotaxi services has already begun in Austin, Texas, and the company is seeking regulatory approval to expand autonomous ride-hailing in several US states, including Nevada, Arizona, and Florida. 'Autonomy is the story,' Musk told investors, projecting that the robotaxi business could start materially contributing to Tesla's financials by late 2026. Political noise and leadership exits raise questions Beyond operational challenges, investor concerns are mounting over Musk's ability to focus on Tesla amid his broader ambitions. The billionaire recently announced the formation of a new political party, locking horns with the Trump administration. Despite pledging to reduce political engagements, Musk's increasing public involvement continues to divide attention. The recent departure of several top executives, including a trusted lieutenant overseeing sales and manufacturing in North America and Europe, has only added to the uncertainty. While Tesla's near-term prospects appear challenged by policy changes, pricing pressure, and intensifying competition—particularly from low-cost Chinese EVs—the company is betting on innovation and future services to drive growth. Whether its autonomy-focused strategy and a new, lower-cost model can deliver remains to be seen.
Time of India
10 hours ago
- Automotive
- Time of India
Tesla reports sharp decline in Q2 earnings: Revenue drops 12% as Elon Musk-led EV giant faces 'rough quarters'; Here's all you need to know
Tesla reported weaker-than-expected results for the April–June quarter, posting its biggest revenue drop in over a decade and a notable decline in profits. The Elon Musk-led electric vehicle (EV) giant is facing headwinds from reduced government support and softening demand, even as it pushes ahead with ambitious plans for autonomous driving and new vehicle models. Tired of too many ads? go ad free now For the second quarter, Tesla's total revenue fell 12% to $22.5 billion, down from $25.5 billion in the same period last year, missing analyst expectations compiled by LSEG. Automotive revenue, which makes up the bulk of Tesla's business, declined by 16% year-on-year to $16.7 billion. Adjusted net income also dropped 23% to $1.4 billion, or 40 cents per share, falling short of Wall Street forecasts. Tesla's second consecutive decline This marks Tesla's second consecutive quarter of declining revenue, Reuters reported. The results come despite the launch of a refreshed version of its popular Model Y SUV, which had been expected to boost sales. In fact, global deliveries for the quarter dropped 13.5%. A major blow came from a sharp 51% drop in revenue from automotive regulatory credits. These credits, which other automakers buy from Tesla to meet emissions rules, have historically supported Tesla's profitability. The fall in credit sales further dented both revenue and earnings this quarter. Tesla shares fell nearly 5% Shares of Tesla fell nearly 5% after the earnings announcement, as CEO Musk acknowledged that the company might face "a few rough quarters" ahead. "We probably could have a few rough quarters," Musk said, when questioned on the credits. "I'm not saying we will, but we could - you know, Q4, Q1, maybe Q2, but once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I'd be surprised if Tesla's economics are not very compelling," he added. Tired of too many ads? go ad free now He attributed the short-term challenges to the reduction of EV tax credits in the US, a key incentive that is set to shrink by $7,500 later this year. Elon Musk struck an optimistic tone Despite the tough quarter, Musk struck an optimistic tone about Tesla's future. Musk pointed to the company's autonomous driving technology as a key growth driver, predicting that revenue from self-driving software and services could start ramping up in the second half of 2025. Tesla is investing heavily in developing a robotaxi fleet, including a custom-built autonomous vehicle known as the "Cybercab," which is expected to go into volume production in 2026. A small trial of robotaxis using Model Y SUVs has already begun in Austin, Texas. Musk said Tesla is seeking regulatory approval for its Full Self-Driving (FSD) software in several US states, as well as in the Netherlands, and aims to launch autonomous ride-hailing services across half the US by year-end. 'It's just a Model Y': Elon Musk The company is also working on a new, more affordable model — a stripped-down version of the Model Y, to target a wider customer base. However, Chief Financial Officer Vaibhav Taneja told Reuters that the production of the lower-cost model would ramp up more slowly than originally planned, starting next quarter. Musk, when asked about the vehicle's design, jokingly said, "It's just a Model Y," adding to "let the cat out of the bag there." Analysts say Tesla's focus on a cheaper EV could be key to regaining sales momentum, especially as the company faces increasing competition from lower-priced Chinese EV makers and consumer backlash against Musk's controversial political stances. Tesla's lineup is also beginning to show its age, despite the recent refresh of the Model Y. The company reiterated its production plans for the Cyber cab and its long-delayed Semi truck, both scheduled for volume output in 2026. While Tesla's near-term financials appear shaky, much of its trillion-dollar valuation still hinges on its autonomous vehicle and robotics ambitions.
Business Insider
a day ago
- Automotive
- Business Insider
Market Woes Set Bearish Mood Ahead of Tesla's (TSLA) Q2 Earnings Call
Tesla's (TSLA) stock is once again on the rise ahead of its Q2 earnings report, scheduled for release after tomorrow's market close. With Q2 vehicle deliveries already disclosed earlier this month at 384,000 units, investor attention now shifts to profitability, strategic execution, and Tesla's ability to maintain its competitive edge. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. What's clear is that the days of unchecked, hyper-growth driven by EV manufacturing alone are behind us. Going forward, Tesla's success hinges on its ability to monetize emerging ventures like Robotaxi and Full Self-Driving (FSD). That said, the road ahead is filled with uncertainty—and at Tesla's current premium valuation, the margin for error is razor-thin. As a result, I remain Bearish on TSLA stock. Automotive Woes and Margin Compression First and foremost, market participants are seeking an update to the lifeblood of Tesla's business: its automotive segment. Due to increasing competition and a decline in demand for EVs, consensus estimates point to another challenging quarter for Tesla with double-digit decreases in year-over-year revenue. Tesla's market share is eroding globally. In fact, as of 2024, China-based BYD (BYDDF) is now the world's leading EV manufacturer by volume. This is especially a problem in China, which represents 21% of Tesla's revenue. Once a key growth engine for Tesla, vehicle sales in China are falling over 10% year-over-year. This is particularly worrisome when considering that the overall Chinese EV market is surging, which suggests that Tesla is losing market share. Secondly, Tesla faces a multi-front threat to its profitability. In the second quarter of last year, Tesla's automotive gross margin (ex-credits) was 18.3% and decreased to 16.3% in Q1 this year. Analysts anticipate further margin compression this quarter—and for good reason. Demand for Tesla's Model 3 and Model Y has weakened amid growing competition and more diverse offerings from rivals, as shown by production consistently outpacing deliveries. Like the broader EV industry, Tesla is also grappling with macroeconomic pressures. Elevated interest rates have made car payments less affordable, prompting buyers to opt for lower-priced, lower-margin models like the Model 3. In response to softening demand and rising competition, Tesla has introduced temporary price cuts, which are likely to weigh further on average selling prices and profit margins. TSLA Looks to Save the Day by Pivoting to Robotics & AI Tesla's lofty valuation—reflected in a P/E ratio of 181, more than 800% above the sector median—is largely built on investor confidence in its bold pivot toward artificial intelligence and robotics. The centerpiece of this AI narrative is Tesla's push for full autonomy, recently marked by the launch of a small fleet of around 20 robotaxis in Austin, Texas. While this marks a notable step, it's limited to a tightly geofenced area, making a broader rollout across major U.S. cities unlikely in the near term. At the helm, Elon Musk has gone on record to claim that 'millions of Teslas will be operating fully autonomously in the second half of next year [2026].' However, his track record includes many ambitious promises that were either delayed or never realized. Still, Tesla may unveil early proof-of-concept data from Austin in its earnings report, and potentially, reveal a firm timeline for launching its vast network of autonomous vehicles (AVs). Investors are also eyeing potential updates on Optimus, Tesla's humanoid robot initiative. Musk previously stated a goal of producing ~5,000-12,000 units this year and recently teased 'the most epic demo ever,' fueling speculation that the production-ready Optimus V3 may soon be revealed. However, skepticism remains high, given Musk's history of overpromising and the long road ahead for humanoid robotics. Realistically, Optimus remains a long-duration, high-risk R&D effort, with little chance of meaningful revenue contribution for years to come. Is TSLA Stock a Buy, Sell, or Hold? On Wall Street, TSLA carries a consensus Hold rating based on 13 Buy, 13 Hold, and eight Sell ratings in the past three months. TSLA's average stock price target of $299.52 implies a downside potential of almost 9% over the next 12 months. Earlier this week, Wall Street analyst Alexander Potter reiterated a Buy rating on TSLA with a price target of $400. Sandler believes concerns surrounding the impact of regulatory changes (EV tax credit) are overblown, stating, 'We think that while it's true that the U.S. government is committed to rescinding financial support for the EV and battery industries, Tesla will still book around $3 billion in credits this year, followed by $2.3 billion in 2026.' Tesla's Sluggish EV Growth and Unproven AI Ambitions Tesla's second-quarter earnings are likely to confirm what the market already suspects: its core EV business is losing momentum. With the company's lofty valuation now increasingly tied to its ambitions in AI and robotics, the focus is shifting from vision to execution. The market will soon demand real, near-term progress—not just bold promises. At the same time, Tesla must also defend its legacy automotive business, a tall order for any single company. Given its elevated valuation and the lack of immediate breakthroughs in its emerging tech initiatives, I'm staying Bearish for now. That said, for investors with a higher risk tolerance and a taste for short-term speculation, there's a case to be made. If Tesla falls short of expectations, it could trigger a sell-off, presenting both a selling opportunity in the near term and a potential buy-the-dip entry point for those who believe in Tesla's long-term dominance across EVs and robotics.
Business Insider
2 days ago
- Automotive
- Business Insider
These are the top 5 questions Tesla investors have ahead of the company's Q2 earnings call
Tesla will provide an update on its second-quarter earnings on Wednesday. Investors want to know more about the company's progress on robotaxis and affordable Tesla models. Here are the top 5 questions they have for Tesla. Tesla investors have a lot to keep track of for the company's second-quarter earnings call on Wednesday. As Wall Street analysts eye near-term headwinds for Elon Musk 's company, investors appear to be curious about Tesla's longer-term bets, such as robotaxis and the humanoid Optimus robots. The top-rated question from an anonymous retail investor on Say, a communications platform for shareholders and companies, asks what the rate of expansion will be for Tesla's autonomous ride-hailing business. At publication, the question received more than 5,500 upvotes, representing about 2.8 million TSLA shares. Here are the top questions Tesla investors want to be addressed as of Tuesday evening. Robotaxi Tesla has been testing a "pilot launch" of its robotaxi service in Austin for about a month. Last week, the company expanded its service area map. California and Phoenix appear to be up next for a potential robotaxi rollout. Musk previously said the service's ramp-up should be quick, estimating about 1,000 robotaxis in Austin within the next few months "Can you give us some insight how robotaxis have been performing so far and what rate you expect to expand in terms of vehicles, geofence, cities, and supervisors?" an anonymous retail investor asked on Say. Affordable models Musk says Tesla is more than just a car maker, but investors still want to know: Where's the affordable Tesla? "Can you provide an update on the development and production timeline for Tesla's more affordable models? How will these models balance cost reduction with profitability, and what impact do you expect on demand in the current economic climate?" another retail investor asked. As Tesla experiences a sales slump, analysts previously told BI that delivering a cheaper model becomes increasingly crucial for the company. Full Self-Driving (Unsupervised) Tesla owners are currently limited to Full Self-Driving (Supervised), an advanced driver-assistance system that requires constant supervision of a driver. Business Insider previously tested the technology against Waymo 's robotaxis. (Tesla lost after it ran a red light.) At the end of June, the company announced its first autonomously delivered Model Y, driving further anticipation for an unsupervised version of FSD. "What are the key technical and regulatory hurdles still remaining for unsupervised FSD to be available for personal use? Timeline?" a retail investor asked. Musk on Sunday said on X that FSD users will see a "step change improvement as we integrate upgrades for the Austin robotaxi build into the general production release." Optimus Optimus, a humanoid robot, is one of Tesla's focuses that Musk says makes his company not just an EV play but an AI and robotics venture. Musk is so bullish on Optimus — and people's desires to have a personal robot — that the CEO said back in February that Optimus will be a ten-trillion-dollar revenue generator. He has also said that personal robots will unlock massive GDP growth and a "universal high-income situation." That's the long-term outlook. Investors want to know how Optimus will contribute to Tesla in the next couple of years. "What specific factory tasks is Optimus currently performing, and what is the expected timeline for scaling production to enable external sales? How does Tesla envision Optimus contributing to revenue in the next 2-3 years?" a retail investor asked. FSD (again) In a clear sign of high anticipation around improved self-driving capabilities, investors upvoted another question around FSD (Unsupervised) in personal cars. "When do you anticipate customer vehicles to receive unsupervised FSD?" another retail investor asked.
