Tesla stock gained around 63% in 2024, virtually all of that in the fourth quarter, especially after President Donald Trump's election win. Now, Chief Executive Elon Musk appears to be signaling 2025 could be a middling year for the EV giant, with only slight vehicle sales growth, even as he continues to sound bullish on the possibility for incredible things to come in 2026, 2027 and 2028.
TSLA swung 2% higher to 360.80 during Wednesday's stock market action. the stock declined 1.6% to 355.84 last week. Last Wednesday, TSLA advanced 2.4%, snapping a five-session losing streak and it rebounded from 2025 lows. Benchmark initiated TSLA stock at a buy with a 475 price target.
However, TSLA retreated somewhat as news broke that Musk plans to spend the next four months working at Department of Government Efficiency, known as DOGE. He aims to cut $2 trillion from the federal budget.
This comes after Tesla stock on Feb 11 sank 6.3% to 328.50, its lowest since late November. Tesla initially rallied after reporting fourth-quarter earnings late on Jan. 29 but has reversed lower.
Musk told analysts on the Q4 earnings call that in 2025 Tesla will continue to lay the "groundwork" for an "epic" 2026 and a "ridiculously good" 2027 and 2028. That's based on artificial intelligence, fully autonomous vehicles and the Optimus humanoid robot product, according to Musk.
Arguably the biggest announcement the earnings call was that unsupervised full self-driving, or FSD, will come as a paid service to Austin, Texas, in June. Musk added there will be robotaxi tests in many U.S. cities by year end. The Tesla head was also bullish on Optimus, projecting the company could be selling units sometime in the first half of 2026.
"Long term, Optimus will be overwhelmingly the value of the company," Musk said.
Meanwhile, Adam Jonas, Morgan Stanley's high-profile auto analyst and a TSLA bull, late on Friday removed the firm's "top pick" designation for TSLA. Jonas maintained a 430 price target and an overweight rating on the shares.
Following Q4 earnings, Jonas wrote the results were "mostly disappointing," but added that the report was not "particularly narrative changing."
With President Donald Trump back in the White House and fourth-quarter earnings in the rearview mirror, the top question for investors is: when is it a good time to buy or sell Tesla stock.
FSD In China?
Tesla is girding itself for a possible delay in Chinese approval of its FSD technology, amid the latest U.S.-China trade war, the Financial Times reported Monday, citing sources.
That could leave Tesla at a disadvantage as China rivals such as BYD make similar systems standard.
Meanwhile, Tesla will begin new Model Y deliveries in China later this month.
Chinese regulators have told the EV giant that "there is no definitive timetable" for Tesla FSD approval. That would let Tesla begin training FSD in China.
Beijing is considering using Tesla's FSD license as a bargaining chip in trade talks with President Donald Trump.
Tesla: Fourth-Quarter Earnings
Tesla announced late on Jan. 29 worse-than-expected fourth-quarter earnings and revenue, with Q4 EPS of 73 cents, growing 3% compared to Q4 2023, and revenue increasing 2% to $25.71 billion. After a surprise gain in Q3, Tesla's total gross margins fell 138 basis points to 16.3%. Auto gross margins excluding regulatory tax credits tumbled to 13.6% vs. 15.7% expected, per FactSet.
Musk claims that battery backs are a "constraint" this year but that Tesla is working to address that issue.
"I think we will make progress on addressing that constraint and then things are really going to go ballistic next year and then really ballistic in 2027 and 2028," Musk said.
"The reality of autonomy is upon us," Musk added, again touting the outlook for the value add of FSD.
However, Musk has conceded that Tesla EVs with Hardware 3.0 might not be able to achieve true self-driving.
Following Q4 earnings, analyst 2025 profit estimates have been coming down. As of Feb. 14, Tesla's 2025 EPS is expected to come in at $2.93, down 11% from the $3.31 expectation prior to Q4 earnings, according to FactSet. Estimates for 2026 have come down significantly as well.
Tesla annual earnings are now not forecast to rise above the 2002 peak of $4.07 per share until 2027, according to FactSet.
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Read more on Tesla's third-quarter results, second-quarter earnings or on the company's first-quarter report.
The Analyst Reaction
Morgan Stanley's Jonas wrote that the Q4 results were "mostly disappointing," but added that the report was not "particularly narrative changing."
"Tesla's 4Q results are emblematic of a company in the transition from an automotive 'pure play' to a highly diversified play on AI and robotics," Jonas wrote. "While the journey may be volatile and nonlinear, we believe 2025 will be a year where investors will continue to appreciate and value these existing and nascent industries of embodied AI where we believe Tesla has established a material competitive advantage."
William Blair analyst Jed Dorsheimer noted that he has "learned to tack 6 to 12 months on Musk's full self-driving (FSD) optimism" but that the June 2025 rollout for unsupervised FSD is "well ahead of our 2026 timeline estimate."
Wedbush Securities analyst Dan Ives, a Tesla uber-bull, wrote that the "surprising news" out of the conference call was the June 2025 target and that this could mean that Tesla's unsupervised FSD" is in the final stages of being ready for the public and the biggest headwinds remain on the regulatory side, not due to technological capabilities."
"With unsupervised FSD expected to be available throughout the U.S. by the end of 2025 and the rest of the world by the end of 2026 this will be a focus of the bulls," Ives wrote.
CFRA's Garrett Nelson added that despite the earnings miss, with Musk backing off prior 2025 vehicle sales growth expectations, TSLA is moving higher on the unsupervised FSD launch.
Electrek reported on Jan. 30 that around a quarter of Tesla's Q4 earnings were due to a $600 billion gain on Bitcoin, meaning Tesla made more profit last quarter from regulatory credits and Bitcoin than from its business operations.
The Delaware Court Decision
Meanwhile, Delaware Court of Chancery Judge Kathaleen McCormick recently stuck with her January 2024 decision and once more rejected Musk's $56 billion compensation package from 2018. The pay deal is now worth more than $100 billion.
In a statement on X, Tesla said it will appeal the court's decision.
In June, some 77% of shareholders voting approved giving Musk his 2018 $56 billion pay package, or 72% excluding Musk and his brother, Kimbal Musk. Tesla shareholders also voted this year in favor of reincorporating the company in Texas, moving it from Delaware.
Before the June 2024 shareholder vote, Musk suggested he might shift Tesla resources to his privately held xAI if he didn't get the pay deal, as well as further power giving him a 25% voting stake.
Musk currently has a nearly 13% stake in Tesla. Prior to selling TSLA shares to purchase Twitter, now X, for $44 billion in late 2022, Musk owned around 22% of Tesla.
Judge Kathaleen McCormick wrote in in the opinion that, "Even if a stockholder vote could have a ratifying effect, it could not do so here."
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IRA Tax Credit
TSLA shares about 5.8% on Nov. 14 amid reports the president-elect's transition team plans to discontinue the Inflation Reduction Act, IRA, $7,500 EV consumer tax credit. The move was not a surprise to analysts and Musk has appeared to already endorse the idea of cutting the tax credit, echoing the belief that Tesla can thrive without it.
However, if the IRA tax credits are stripped away, it could hit Tesla's auto business. The EV giant has already slashed prices repeatedly over the past year to drum up consumer interest amid waning demand.
Tesla continues to ramp up incentives, especially in the U.S., as the company targets record deliveries in Q4. The EV giant recently announced a year-end discount on local Model Y sales.
"We expect Musk to have a big seat at the table as these EV discussions happen within the Trump transition team," Wedbush analyst Dan Ives wrote at the time. "We believe any sell-off in Tesla from these reports is the wrong knee-jerk reaction and we would be buyers."
Meanwhile, the Tesla Cybertruck is now eligible for the $7,500 IRA tax credit, which should boost demand, at least to start 2025.
The Musk-Trump Alliance
Analysts generally see the Trump presidency as an overall negative for EVs, but a positive for Tesla. Musk fostered a good relationship with the president-elect after campaigning tirelessly for him throughout the election cycle.
Late on Nov. 12, Trump announced in a statement that Musk will lead the Department of Government Efficiency (DOGE) to "dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures and restructure Federal Agencies."
The Department of Government Efficiency is tasked with providing "advice and guidance from outside of Government and will partner with the White House and Office of Management & Budget."
"Musk's significant influence in the Trump White House is already having a major influence and ultimately the golden path for Tesla around Cybercabs and autonomous is now within reach with an emboldened Trump/Musk strategic alliance playing out in real time and very in line with our thesis," Ives wrote on Nov. 29.
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However, JPMorgan in early January estimated that, based on Trump's proposals to remove EV tax credits and subsidies, about 40% of Tesla's profits would be in danger after Trump takes office.
"Tesla does not appear to us on track to dominate the global auto industry amidst the electrification transition, which we view as only the starting point for present valuation," JPMorgan analyst Ryan Brinkman wrote.
Tesla Stock: The Robotaxi Event
Musk set sky-high expectations for the "We Robot" event. But after showing off a Cybercab and Robovan late on Oct. 10, the market seemed unimpressed with Musk as he once more claimed full autonomous driving will come "next year" but did not offer any details or updates of an "affordable" EV.
The event was high on theatrics with Musk riding the two-seat Cybercab, with butterfly doors and no steering wheel, briefly to the stage to give his remarks. Dancing Optimus robots were paraded out with the Tesla humanoids serving attendees drinks. However, the consensus among analysts was that while the event was high on pomp and circumstance, it underdelivered on details.
Musk did say he expects the Cybercab price tag will be below $30,000, with production starting "before 2027." The Tesla chief also showed off the latest Optimus robot. He expects that the cost could be $25,000-$30,000 when produced at scale.
"That's it? Disappointing lack of detail," Jonas proclaimed in his investor note following the event. Wells Fargo analysts echoed that sentiment, writing that Tesla's robotaxi event was mostly "razzle-dazzle" with "little substance."
"We were overall disappointed with the substance and detail of the presentation. As such, we anticipated TSLA to be under pressure following the event," Jonas added.
Tesla Robotaxi Event: Cybercab, Robovan Unveiled; Musk Sees Self-Driving 'Next Year'
Cathie Wood On The Robotaxi
Tesla stock sold off hard the day following the robotaxi event, sending a sell signal to investors. However, Cathie Wood and her Ark Invest ignored that and purchased nearly $3 million in TSLA shares.
Wood, who has long been super-bullish on Tesla's autonomy push and robotaxi aims, attended Tesla's robotaxi event on Thursday. On June 12, Ark Invest updated its Tesla stock price target to 2,600 by 2029, estimating that around 90% of Tesla's enterprise value and earnings will be attributed to the robotaxi business in 2029.
Wood's Ark Invest tends to purchase Tesla stock and other positions amid sell-offs or when they break below key moving averages. Without a robotaxi network and business, Ark Invest says its TSLA price target would be around $350 per share, according to the report.
"We remain confident that the service will launch within the next five years," Ark Invest said.
Tesla EVs In Regulators' Sights
The National Highway Traffic Safety Administration announced in January it opened an investigation into Tesla, citing "Actually Smart Summon sessions resulting in crashes during the session, including where the operator does not have enough time to react due to vehicle proximity or line of sight."
Federal regulators wrote they have received one complaint alleging that an Actually Smart Summon session resulted in a crash and has reviewed at least three media reports of apparently similar crashes. All four incidents involve Tesla vehicles operating in Actually Smart Summon failing to detect posts or parked vehicles, resulting in a crash, according to NHTSA.
Is Tesla Stock A Buy?
Almost single-handedly, Elon Musk has turned the auto industry on its head. He has essentially forced it to get aboard the electric-vehicle train. Tesla has been a monster stock over much of its history, especially during its stratospheric run from mid-2019 to late 2021.
Tesla stock now no longer has a valid base and is in a sharp downturn after slipping more than 12% in February. Shares are now about 27% below that traditional 488.54 buy point and record high from Dec. 18, according to MarketSurge charts.
Tesla stock has dropped since hitting resistance on Jan. 31 at a downward-sloping trendline. Investors who bought on the Nov. 6 postelection breakout have seen the bulk of a scorching hot 200-point gain disappear — mostly since the end of January.
As a result, the relative strength line for Tesla stock is hovering around a three-month low.
Tesla sales have tumbled in Europe to start 2025, a sign that Musk's increasingly political statements are hurting the brand there as well as in the U.S. Meanwhile, it's possible the recent stock decline reflects an ongoing re-evaluation of Tesla's earnings report and conference call.
The stock consolidated in January, pausing after a scorching hot fourth quarter where Tesla stock logged most of its 63% advance for 2024, especially after Trump's election win.
Tesla stock ranks third in the 35-stock IBD Auto Manufacturers industry group. The stock has an 82 Composite Rating out of a best-possible 99. Shares also have a 94 Relative Strength Rating and an 83 EPS Rating.
The stock on Dec. 11 cleared the company's longtime all-time high of 414.50, which it hit on Nov. 4, 2021. The stock had previously last touched 400 in January 2022.
See More Tesla Stock News And Analysis
Please follow Kit Norton on X @KitNorton for more coverage.
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