Tesla Stock Dropped 8%. The Earnings Call Lacked Meat. — Barrons.com
Dow Jones Newswires ·
Al Root and Elsa Ohlen
Tesla stock fell Thursday following the company's relatively bland second-quarter earnings report. Not even kind words from President Donald Trump helped.
Investors wanted to hear more new details about more topics, including Tesla's ambition to become a leader in robo-taxis, or self-driving cars, which has been a driver for shares of Elon Musk's electric-vehicle maker.
Tesla stock lost 8.2%, closing at $305.30 on Thursday, while the S&P 500 rose 0.1% and the Dow Jones Industrial Average fell 0.7%.
It is always tough to predict how the stock will react to Tesla's earnings. Shares rose 5.4% after first-quarter numbers that were arguably worse than the second-quarter report, so the fact that Tesla stock fell on Thursday had Wall Street looking for reasons. A lack of new details is one possible explanation.
The conference call lacked Musk's "usual puffery," wrote GLJ Research analyst Gordon Johnson on Thursday. "On last night's earnings call, Tesla's focus was mostly on stuff it barely sells." He was referring to humanoid robots and self-driving taxi services versus EVs.
It's a bearish take, but Johnson rates the shares Sell and has a Street-low price target of $19.05 a share. The next lowest targets are in the range of $120.
"Robo-taxi [is] the focus but [there is] still some cloudiness," wrote Baird analyst Ben Kallo on Wednesday. "We are mixed on [Tesla's] ability to meet its robo-taxi timelines, cost targets, and scale."
Musk has big plans to expand the robo-taxi business Tesla launched in Austin, Texas, in June. He believes Tesla's service can cover half the U.S. population by the end of the year, pending regulatory approvals.
That prediction could prove aggressive. Alphabet's Waymo, which completes more than 250,000 self-driving cab rides a week, has ramped up slower, operating in Los Angeles, San Francisco, Phoenix, Austin, and Atlanta. Tesla, however, builds thousands of cars each month, so it has that as a scaling advantage.
Kallo rates Tesla stock at Hold and has a $320 price target. Wedbush analyst Dan Ives rates Tesla stock at Buy and has a target of $500. Ives felt better about the quarter, calling Tesla's progress "solid" in a Thursday report. He is also encouraged that Musk is spending more time at Tesla these days.
"The autonomous opportunity is worth $1 trillion alone for Tesla," added Ives. "There are still headwinds, tariffs, and clear growth challenges for Tesla over the coming three to six months...but Musk now entering the picture as a wartime CEO to put Tesla on an aggressive [artificial-intelligence]-focused strategy represents the biggest and best possible news for Tesla investors."
One of those growth challenges is a loss of the federal EV tax credit and Trump's rollback of emission standards. In a call with investors Wednesday afternoon, Musk said that government cuts in support for EV makers could lead to "a few rough quarters." For him, autonomous-driving technology remains the answer to those questions.
"We probably could have a few rough quarters. I'm not saying we will, but we could. Q4, Q1, maybe Q2," Musk said. "But once you get to autonomy at scale in the second half of next year, certainly by the end of next year...I would be surprised if Tesla's economics are not very compelling."
Right now, investors are focused on the "rough quarters." Some kind words from Trump didn't help investor sentiment, although they could have allayed concern about the relationship between the president and the tech entrepreneur. Trump and Musk have feuded publicly in recent weeks.
"Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large-scale subsidies he receives from the U.S. Government," wrote Trump on Truth Social on Thursday. "This is not so! I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before! The better they do, the better the USA does, and that's good for all of us."
Less drama with the president is positive, but overall, it was "a mild quarter," wrote Cantor Fitzgerald analyst Andres Sheppard on Thursday. He was encouraged by comments about Tesla's new lower-priced vehicle, which the company said began production in June. He would still like to see the car, noting the "company has not yet unveiled this vehicle."
Tesla needs new models to help boost sales. It sold about 721,000 vehicles in the first half of 2025, down 13% from a year earlier.
Sheppard rates Tesla stock at Buy and has a $355 price target.
Overall, 44% of analysts covering Tesla stock at Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst target price for Tesla stock is about $316.
Write to Elsa Ohlen at [email protected] and Al Root at [email protected]
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
Source:
Dow Jones Newswires