Tesla’s (NASDAQ: TSLA) high valuation has long been a concern for investors. A strong surge in the price of Tesla stock in Q4 2024, as well as co-founder Elon Musk’s growing alliance with President Donald Trump, led many to assume that the electric vehicle (EV) maker could maintain its upward trajectory in the first half of 2025.
The company’s Q3 2024 earnings call, released on October 23, was quite a success. However, the latest quarterly report, covering Q4 2024, released on January 29, is looking like quite a disappointment.
On the day of the report, Tesla stock closed at $389.10 — soon after, it dipped by 5.55%, down to $367.50, before mounting a recovery up to $404.95 by press time in the pre-market trading session, some 4.07% above its latest close.
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Earnings per share (EPS) came in at $0.73 — slightly below analyst estimates of $0.76. In addition, roughly 25% of that can be attributed to $0.6 billion in unrealized gains from the company’s Bitcoin (BTC) investments. If focusing solely on core business operations, Tesla provided EPS of $0.57 — which is quite a worrying decline.
In addition, revenues of $25.7 billion also missed estimates — which were pegged at $27.2 billion. Equity analysts have revised their outlook on the EV business — and they seem to be far from a strong consensus.
Analysts are divided on the future prospects of Tesla stock
Morgan Stanley (NYSE: MS) analyst Adam Jonas set a $430 forecast for the price of a Tesla share, up from $400. He reiterated a prior ‘Overweight’ rating, opining that the company’s Q4 results are emblematic of a transition from a pure-play automotive business to a more diversified one based on artificial intelligence (AI) and robotics.
Jonas added that, while the journey may be volatile and non-linear, Morgan Stanley believes investors will continue to appreciate and value the nascent industries where the firm believes Tesla has established a material competitive advantage. If met, his price target would equate to a 10.51% rally from current prices.
William Stein of Truist Securities was much more cautious. The semiconductor & AI equity analyst maintained a ‘Hold’ rating. Stein did increase his price target to $373 from $353 — his newer forecast equates to a 7.88% downside from the price of Tesla stock at the time of publication.
The analyst commented that the earnings call had ‘too much cheerleading, not enough ground-truth’, emphasizing the lack of critical details, such as AI milestones and information about new vehicles.
UBS auto equity researcher Joseph Spak gave a bearish outlook. Although he raised his price target to $259 from $226, he maintained a ‘Sell’ rating. Spak’s price target implies a 36.04% downside.
In a note shared with investors, he highlighted that UBS values Tesla’s energy and auto business at $53 a share — in other words, at last close, the company’s prospective ventures — AI, robotics, and full self-driving (FSD) are already being valued at roughly $1.2 trillion.
Finally, the analyst stated that, while UBS is impressed with the progress made thus far, Tesla stock is still exposed to technology risk, execution risk, as well as timing uncertainty.
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