Tesla (NASDAQ:TSLA) shares showed resilience following a bleak Q4 earnings report, with misses across nearly all key metrics. Despite the disappointing results, the Street offered little pushback, as investors shifted their focus to Elon Musk’s commentary on upcoming ventures.
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Among the key developments, Tesla’s robotaxi program remains on track for a mid-2025 launch in Austin, with potential expansion into California later that year. The company also expects to introduce at least two new products in 2025, including a lower-cost vehicle. Meanwhile, its energy storage business continues to gain traction, with deployments projected to grow by more than 50%. Additionally, Tesla recorded a $600 million mark-to-market gain on its Bitcoin holdings, a factor some investors may view as a positive. While battery pack constraints pose a challenge, the company is actively working to resolve the issue.
However, while evidently investors liked all the above, Bank of America analyst John Murphy remains cautious, citing multiple challenges ahead. The transition to the updated Model Y will lead to weeks of lost production across all Tesla factories, weighing on Q1 results by impacting both revenue and gross margins. Murphy estimates this shift could result in a production loss of 100,000 vehicles. Additionally, declining average selling prices, attractive leasing terms, and various incentives have put sustained pressure on gross margins – a trend likely to persist as Tesla prioritizes volume growth.
Murphy also views the discussion surrounding Optimus as more of a distraction, noting that while the humanoid robot holds “meaningful long-term potential,” its current contribution to Tesla’s valuation remains small. Meanwhile, tariffs could further squeeze profitability due to Tesla’s reliance on imported parts.
While Tesla said it is eyeing a return to growth for its core vehicle business in 2025, Murphy points out that the less defined outlook looks like a “step back” from the 20-30% volume growth in 2025 Elon Musk talked about on the 3Q24 earnings call (although that was never put in writing).
Considering the results and comments made by the company, Murphy has made some small changes to his estimates. Specifically, mainly on account of the changeover of the Model Y in Q1, his 2025e EPS forecast is lowered from $3.15 to $3.05.
To this end, Murphy remains on the sidelines with a Neutral rating and a $490 price target on Tesla shares. That said, with a projected 21% upside over the next 12 months, one could argue his stance leans closer to bullish than neutral. (To watch Murphy’s track record, click here)
The Street’s average target, on the other hand, is a more downbeat $335.44, suggesting the stock has overshot by 17%. All told, based on 12 Buys and Holds, each, and an additional 9 Sells, the analyst consensus rates TSLA stock a Hold. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
