Tesla (TSLA) Stock: What to Expect Ahead of January 28 Earnings

TLDR

• Tesla stock trades at a P/E ratio of 293, which even bullish investors may find excessive given current business challenges
• EV deliveries dropped 9% in 2025 as competition intensifies and the federal EV tax credit ended under President Trump’s legislation
• The company posted $21.2 billion in automotive revenue in Q3 2025, representing 75% of total revenue of $28.09 billion
• Tesla’s robotaxi service currently operates only in Austin and San Francisco Bay Area, with plans to expand to more cities in 2026
• Wall Street expects Q4 earnings of $0.45 per share (down 38.5% year-over-year) when results release January 28, with analyst consensus rating at Hold

Tesla reports Q4 2025 earnings on Wednesday, January 28. The results come at a crucial time for the company.

The stock has climbed 3,190% over the past decade as of January 22. But recent performance tells a different story.

Tesla, Inc., TSLA

EV deliveries fell 9% in 2025. Automotive revenue dropped 9% through the first nine months of the year.

Price cuts have eaten into margins. Competition in the EV space has heated up. President Trump’s legislative package eliminated the federal tax credit for EVs.

CEO Elon Musk’s political activities have turned off some buyers. These factors combine to create headwinds for the core business.

The numbers paint a clear picture. In Q3 2025, automotive revenue hit $21.2 billion out of $28.09 billion total. That means 75% of revenue still comes from selling cars.

The Margin Story Matters Most

Automotive gross margin excluding regulatory credits will be the number everyone watches. Investors want to see if pricing has stabilized after the cuts.

Cost savings from manufacturing efficiency could help offset margin pressure. Even a small improvement might spark a stock rally.

Wall Street expects earnings of $0.45 per share for Q4. That’s down 38.5% from last year’s same quarter. Revenue projections sit at $24.77 billion compared to $25.7 billion in the prior year.

The company trades at a P/E ratio of 293. That valuation assumes near-perfect execution going forward.

Tesla’s future hinges on autonomous driving technology. The robotaxi service currently operates in just Austin and the San Francisco Bay Area. More cities should come online in 2026.

Musk talks about “quasi-infinite” demand for robotaxis. The vision involves high-margin recurring revenue from AI-powered self-driving software. But Tesla lags behind competitors in driverless miles driven.

What Investors Need to Hear

Three factors will likely move the stock after earnings. First, vehicle margins need to show stability or improvement. Second, updates on Full Self-Driving adoption and robotaxi progress will matter. Third, guidance on demand and deliveries for the coming quarters.

Ark Invest believes Tesla will build value as an autonomous vehicle provider. That depends on bringing cost per mile down while scaling manufacturing capacity.

The competitive landscape keeps getting tougher. In China, domestic manufacturers squeeze Tesla’s market share despite local production. Europe delivered the biggest blow with sales down 27.8% year-over-year to 235,322 units in 2025.

Any signs of weakening demand could override an earnings beat. Inventory levels and order trends heading into Q1 2026 will tell the real story.

Analyst consensus rates the stock a Hold. The average price target of $398.38 implies 11.3% downside from current levels. Ten analysts rate it a Buy, eight say Hold, and seven recommend Sell.

The stock closed at $449.06 on January 23. It trades in a 52-week range of $214.25 to $498.83.

Tesla faces a choice between two narratives. Critics see a struggling automaker with a damaged brand in a slowing industry. Bulls see an AI company that happens to make cars today.

Wednesday’s earnings call will reveal which story has more merit. Management commentary on FSD pricing, AI compute progress, and Optimus robot timelines could shift sentiment quickly.

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