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KIT NORTON

Tesla Stock Looks To Advance After Tariffs Sell Off. But It's No Longer A 'Top Pick.'

Tesla stock on Tuesday shook off some of its tariffs-related losses from Monday as President Donald agreed to month-long reprieves for both Canada and Mexico. Meanwhile, TSLA consolidated in January with 2025 earnings consensus estimates plummeting 11% following Q4 earnings last week.

Many stocks, including Tesla, were hit hard on Monday on the Trump tariff news. However, late Monday, Canadian Prime Minister Justin Trudeau announced a $1.3 billion border plan that will pause Trump's tariffs for at least 30 days. Midday Monday, Trump granted Mexico a one-month reprieve from 25% tariffs that were set to take effect Tuesday, after Mexican President Claudia Sheinbaum committed to send 10,000 troops to the border to halt drug trafficking.

U.S. tariffs on China went into effect Tuesday and China has retaliated with tariffs on U.S. crude oil, liquefied natural gas, coal and other commodities.

Troy Teslike, whose delivery estimates and Tesla data tracking are highly respected among retail Tesla investors, on Feb. 2 posted to X that based on the company's current battery supply, he doesn't "see any immediate problems due to Trump's trade war with Mexico, Canada and China."

"If Trump starts a trade war with Japan, it would impact Tesla's Model S and Model X production in the U.S.," Teslike wrote.

TSLA rose around 2.3% to 392.40 during market action on Tuesday.

Shares tumbled 5.2% to 383.68 on Monday, falling below the 50-day moving average. Tesla flirted with an early entry Friday.

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The Tesla Cybertruck late Monday also officially began to qualify for the full $7,500 Inflation Reduction Act, or IRA, tax credit. Trump has signaled EV tax credits could be stripped out of the IRA. The Cybertruck starting price with the tax credit is around $72,490.

Tesla Not A 'Top Pick'

Prior to Trump's tariff policy dominating the news cycle, Tesla Q4 earnings missed Wednesday night, even with a Bitcoin gain, with core auto margins hitting a multiyear low. However, Chief Executive Elon Musk was extremely bullish on the earnings call. He said he expects Tesla to start paid robotaxi rides in Austin.

It Could Be A Muted 2025 For Tesla. Investors Don't Care Following Q4 Earnings.

Morgan Stanley analyst Adam Jonas, a longtime Tesla 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 earnings, Jonas wrote the results were "mostly disappointing," but added that the report was not "particularly narrative changing."

Musk appeared to signal that 2025 could be another middling year for the EV giant, with only slight vehicle sales growth, as much of the conference call highlighted the possibility for incredible things to come in 2026, 2027 and 2028. As a result, analyst 2025 profit estimates have been coming down since Wednesday.

As of Tuesday, Tesla's 2025 EPS is expected to come in at $2.95, 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.

Tesla Stock Performance

TSLA is has a base with a traditional 488.54 buy point, the record high from Dec. 18, according to MarketSurge charts. The stock is about 27% below that entry.

Last week, Tesla stock edged down 0.5% to 404.60 after briefly flashing an early entry Friday. The EV giant came right up to a downward-sloping trendline on Friday, paring gains on Trump tariff news.

It's possible that Tesla's retreat from Friday's highs and Monday's slide reflected an ongoing re-evaluation of Tesla's earnings report and conference call.

A move above Friday's intraday high of 419.99 could offer an early entry. Investors also could use the Jan. 17 high of 439.74 to enter Tesla stock.

TSLA stock is on the IBD Leaderboard watchlist. For this afternoon's earnings, the Musk-led earnings call will be the focus, as usual.

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 first in the 35-stock IBD Auto Manufacturers industry group. The stock has a 91 Composite Rating out of a best-possible 99. Shares also have a 97 Relative Strength Rating and an 84 EPS Rating.

Please follow Kit Norton on X @KitNorton for more coverage.

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