Tesla: Risk To Earnings And Stock

Tesla

Our earnings for 2026 are way below the Street now based on recent results. Unless they magically figure out FSD and Robotaxis we don't know how they make Street numbers. We believe stocks are generally priced on the 'next year's' potential earnings. We view that as a material risk to the stock price.

Many are hopeful for autonomy but the story changing form hope-plus-earnings into hope-with-no-earnings is a risk.

With EV revenues and profits dropping, two other main profit drivers had been regulatory credits and Energy. But both are slowing.

Regulatory credits are now down four quarters in a row. And with Trump backlash and probably competitors needing fewer credits, that key near-all-profit driver has been shrinking. This line was a key reason we were big bulls a few years ago. Now though, with a pure-profit line slowing, it's a material risk.

Energy revenue growth had been a hope to replace the EV sales slowdown, but it too slowed drastically this quarter. Business though can be lumpy from quarter-to-quarter but for now there does not appear any reason to model a re-acceleration.

Tesla has of course changed the world with EV and potentially with autonomy but stock prices reflect multiples of earnings and with the risk of a continued earnings slowdown, there's risk to the stock price.

We'd point out the stock, after an EPS miss, is testing key medium term levels, and potentailly slicing them meaning there is meaningful downside technical risk ahead.

Both our fundamental and technical price target are much lower than current levels.

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