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Tesla at a Crossroads: What to Watch in Q2 Earnings
Tesla Q2 Earnings Preview
Zacks Rank #4 (Sell) stock Tesla ((TSLA - Free Report) ) will be one of the most-watched stocks to kick-off earnings season, reporting second quarter earnings after the close on Wednesday, July 23rd after the market close. Tesla, and its eccentric and outspoken CEO Elon Musk, have been all over the news in 2025 after Musk entered the political scene, faced boycotts, and is embroiled in an ugly spat with US President Donald Trump over his “Big Beautiful Bill.” Beyond the headline-driven noise, the upcoming earnings report will help answer many of the questions that investors have about Tesla and its future. Before we dig deeper into Tesla’s future roadmap and key metrics to watch, below are some historical data points to help investors prepare for Wednesday’s report:
· TSLA Earnings Price Move: The options market implies an earnings move of +/- 7.4% following Wednesday’s report. However, over the past few quarters, TSLA has averaged actual earnings moves that were slightly higher (~10%).
· Earnings Surprise History: Tesla has missed the Zacks Consensus Estimatessix times in the past seven quarters. Over the past four quarters, Tesla has missed estimates by an average of -8.33%.
Image Source: Zacks Investment Research
· Tesla Stock Performance: Year-to-date, Tesla shares exhibit relative strength, down 18.4% while the S&P 500 Index is up 6.6%.
Image Source: Zacks Investment Research
Though Tesla remains the dominant global electric vehicle (EV) manufacturer, its legacy business has slowed. That said, in true Elon Musk fashion, Tesla is going ‘all in’ on transitioning and diversifying its business to dominate the future.
5 Questions to Ponder During Tesla’s Earnings Call
1. Can the Tesla Robotaxi Catch Waymo? Tesla finally launched its robotaxi service in Austin, Texas, late last month. Although the launch is a beta test, utilizing a limited fleet of Model Y vehicles with safety companions on board, it is meaningful in that it signifies the company’s official entrance into the robotaxi race. Currently, Alphabet’s ((GOOGL - Free Report) ) ‘Waymo’ is off to a wide lead, operating in five major US cities. That said, Tesla bulls argue that Tesla will be able to scale much faster than Waymo and at a significantly lower cost (due to the fact that FSD does not require the expensive lidar sensors used by Waymo). A key question for Tesla investors to ask is, “How quickly does Tesla plan to expand its robotaxi service to other cities?”
2. Will Tesla Invest in xAI? Elon Musk made headlines last week when his ‘Grok’ chatbot leapfrogged legacy large language AI models like Meta Platform’s ((META - Free Report) ) ‘Llama’ and OpenAI and Microsoft’s ((MSFT - Free Report) ) ‘ChatGPT’ to become the most powerful model in terms of pretraining and reasoning evaluations. Though Musk has ruled out a merger between ‘Grok’ parent XAI and Tesla, he has suggested that he may decide to hold a shareholder vote on whether Tesla should invest in xAI. A Tesla investment in xAI could provide Tesla shareholders with some reassurance in the fact that the company can diversify away from its slowing legacy business into the red-hot AI industry.
3. Will Tesla’s EV-business Steady? Tesla’s annual revenues are expected to shrink in 2025 for the first time in more than five years. Meanwhile, the company experienced its first ever margin decline in 2024 amid falling volumes and generous discount offers. Nevertheless, if Musk can reassure investors that the worst is behind them, Tesla shares can rally.
Image Source: Zacks Investment Research
4. Can Tesla’s Energy Business Remain Electric? Tesla’s energy business is one of the few bright spots for the company recently, with energy storage deployments doubling year-over-year in 2024 as revenues spiked 67%. Can the momentum continue?
Image Source: Zacks Investment Research
5. How will Tariffs and Politics Impact Tesla? While the global trade picture has become clearer since President Trump’s ‘Liberation Day,’ there is still considerable uncertainty about how much pressure tariffs will put on Tesla’s margins. Meanwhile, following Musk’s spat with President Trump, Musk has threatened to start a new political party. Should Musk signal that he is going through with the idea, it may hurt shares. Historical precedent illustrates that investors want Musk at the helm, and any outside distractions are often met with selling.
Beyond the questions above, investors will look for updated timelines on new products such as the ‘Optimus’ robot.
Bottom Line
Tesla is at a crossroads as the company looks to diversify away from its legacy business into new businesses, such as the robotaxi business. Investors will gain valuable new insights when the company reports earnings on Wednesday evening.
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Tesla at a Crossroads: What to Watch in Q2 Earnings
Tesla Q2 Earnings Preview
Zacks Rank #4 (Sell) stock Tesla ((TSLA - Free Report) ) will be one of the most-watched stocks to kick-off earnings season, reporting second quarter earnings after the close on Wednesday, July 23rd after the market close. Tesla, and its eccentric and outspoken CEO Elon Musk, have been all over the news in 2025 after Musk entered the political scene, faced boycotts, and is embroiled in an ugly spat with US President Donald Trump over his “Big Beautiful Bill.” Beyond the headline-driven noise, the upcoming earnings report will help answer many of the questions that investors have about Tesla and its future. Before we dig deeper into Tesla’s future roadmap and key metrics to watch, below are some historical data points to help investors prepare for Wednesday’s report:
· TSLA Earnings Price Move: The options market implies an earnings move of +/- 7.4% following Wednesday’s report. However, over the past few quarters, TSLA has averaged actual earnings moves that were slightly higher (~10%).
· Earnings Surprise History: Tesla has missed the Zacks Consensus Estimatessix times in the past seven quarters. Over the past four quarters, Tesla has missed estimates by an average of -8.33%.
Image Source: Zacks Investment Research
· Tesla Stock Performance: Year-to-date, Tesla shares exhibit relative strength, down 18.4% while the S&P 500 Index is up 6.6%.
Image Source: Zacks Investment Research
Though Tesla remains the dominant global electric vehicle (EV) manufacturer, its legacy business has slowed. That said, in true Elon Musk fashion, Tesla is going ‘all in’ on transitioning and diversifying its business to dominate the future.
5 Questions to Ponder During Tesla’s Earnings Call
1. Can the Tesla Robotaxi Catch Waymo? Tesla finally launched its robotaxi service in Austin, Texas, late last month. Although the launch is a beta test, utilizing a limited fleet of Model Y vehicles with safety companions on board, it is meaningful in that it signifies the company’s official entrance into the robotaxi race. Currently, Alphabet’s ((GOOGL - Free Report) ) ‘Waymo’ is off to a wide lead, operating in five major US cities. That said, Tesla bulls argue that Tesla will be able to scale much faster than Waymo and at a significantly lower cost (due to the fact that FSD does not require the expensive lidar sensors used by Waymo). A key question for Tesla investors to ask is, “How quickly does Tesla plan to expand its robotaxi service to other cities?”
2. Will Tesla Invest in xAI? Elon Musk made headlines last week when his ‘Grok’ chatbot leapfrogged legacy large language AI models like Meta Platform’s ((META - Free Report) ) ‘Llama’ and OpenAI and Microsoft’s ((MSFT - Free Report) ) ‘ChatGPT’ to become the most powerful model in terms of pretraining and reasoning evaluations. Though Musk has ruled out a merger between ‘Grok’ parent XAI and Tesla, he has suggested that he may decide to hold a shareholder vote on whether Tesla should invest in xAI. A Tesla investment in xAI could provide Tesla shareholders with some reassurance in the fact that the company can diversify away from its slowing legacy business into the red-hot AI industry.
3. Will Tesla’s EV-business Steady? Tesla’s annual revenues are expected to shrink in 2025 for the first time in more than five years. Meanwhile, the company experienced its first ever margin decline in 2024 amid falling volumes and generous discount offers. Nevertheless, if Musk can reassure investors that the worst is behind them, Tesla shares can rally.
Image Source: Zacks Investment Research
4. Can Tesla’s Energy Business Remain Electric? Tesla’s energy business is one of the few bright spots for the company recently, with energy storage deployments doubling year-over-year in 2024 as revenues spiked 67%. Can the momentum continue?
Image Source: Zacks Investment Research
5. How will Tariffs and Politics Impact Tesla? While the global trade picture has become clearer since President Trump’s ‘Liberation Day,’ there is still considerable uncertainty about how much pressure tariffs will put on Tesla’s margins. Meanwhile, following Musk’s spat with President Trump, Musk has threatened to start a new political party. Should Musk signal that he is going through with the idea, it may hurt shares. Historical precedent illustrates that investors want Musk at the helm, and any outside distractions are often met with selling.
Beyond the questions above, investors will look for updated timelines on new products such as the ‘Optimus’ robot.
Bottom Line
Tesla is at a crossroads as the company looks to diversify away from its legacy business into new businesses, such as the robotaxi business. Investors will gain valuable new insights when the company reports earnings on Wednesday evening.