Tesla's terrible quarter hasn't stopped analysts dreaming big about its robot future
Elon Musk's carmaker said on Wednesday that revenues plunged 12% year-over-year to $22.5 billion in the second quarter.
Tesla's stock fell as much as 9% in early trading on Thursday morning on the disappointing earnings, its biggest fall since March.
In a call with analysts, Elon Musk took a victory lap after Tesla finally launched its robotaxi service in Austin, predicting that the company's driverless ride-hailing service would cover half the US population by the end of the year.
However, he also warned that Tesla could face "a few rough quarters," as it weathers shifting tariffs and the end of EV tax credits in the US.
Despite the stock price fall, the reaction from Tesla investors and analysts suggests those who are more bullish on the automaker aren't overly concerned by these speed bumps and are looking toward Musk's promises of a trillion-dollar AI future.
Nearly 45% of analysts who cover Tesla retain a buy rating for the automaker, while 31% have a neutral or hold recommendation, Bloomberg data seen by BI shows. Just under 25% have a sell rating on Tesla's stock.
"The stock always remains a battle between what can be and what is," Joseph Spak, a US auto analyst for UBS, told BI via email.
"Bulls will continue to look past valuation, look for evidence of AI progress and dream big," he added.
Wedbush Securities analyst and longtime Tesla bull Dan Ives wrote in a Thursday note that Tesla faces headwinds and "clear growth challenges" for the rest of the year.
While Ives was cautious, he also said that Musk's return to working full-time at Tesla as a "wartime CEO" after his stint in politics was the "biggest and best possible news" for investors, with the EV giant now in a prime position to seize a piece of the "$1 trillion" robotaxi market.
Tesla investor and Deepwater Asset Management partner Gene Munster wrote in a Wednesday blog post that investors had been disappointed not to hear more details about Tesla's robotaxi rollout in Austin, with executives not addressing when the company will remove its human safety monitors or open the service to the public.
However, he said he still believed Tesla was in pole position to win the autonomy race, even with details about the company's next steps lacking.
That position was echoed by analysts at financial services firm Cantor Fitzgerald, who wrote in a Thursday note that they remain "bullish" on Tesla due to the robotaxi expansion and the company's Optimus robot beginning high-volume production in 2026.
'A battle between what can be and what is'
Amid those heady dreams of a glorious robot future, Tesla's present looks decidedly less rosy, with sales of its EVs underwhelming so far this year.
The company reported its second consecutive decline in year-over-year deliveries earlier this month, as it faces rising competition and brand damage from Musk's forays into US politics.
As Musk warned on the earnings call, things are likely to get worse before they get better.
Analysts for investment firm William Blair said that the market for zero-emission regulatory credits, which bought in $439 million for Tesla in the second quarter, is expected to be almost completely eliminated in the US by the Trump administration's One Big Beautiful Bill.
"We are entering a vulnerable time for Tesla, as near-term headwinds, like auto and energy demand, subsidy cuts, and tariffs, pressure financials in the crucial transition to the long-term vision of real-world AI and higher-margin products like robotaxi and Optimus," they wrote.
In a research note published on Thursday, analysts for JPMorgan cut projections for Tesla's earnings per share for 2025 and 2026.
Morgan Stanley, meanwhile, lowered its estimates for Tesla's sales and now estimates the automaker will see a 14% drop this year, with analyst Adam Jonas warning that it may take years for Tesla to make money on its new initiatives as it crosses the "chasm to autonomy."
Spak, the UBS analyst, said the bank had cut its estimates for Tesla vehicle deliveries and earnings per share for 2026 due to the end of EV incentives and regulatory credits in the US.
He added that the reveal that Tesla's upcoming "affordable model" was a cheaper Model Y variant could limit incremental demand.
"However, at the same time, the vision of Tesla as the leading player in robotaxis and humanoids is in its infancy and the ventures are progressing," he said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
18 minutes ago
- Miami Herald
Cathie Wood buys $45 million of battered megacap tech stock
Cathie Wood doesn't give up on companies she believes in. The Ark Invest chief is known for sticking with tech stocks she sees as "disruptive", often buying even when they face setbacks. This is what she just did, adding to a high-profile tech stock amid a post-earnings dip. Wood's funds have experienced a volatile ride this year, swinging from sharp losses to strong gains. In January and February, the Ark funds rallied as investors bet on the Trump administration's potential deregulation that could benefit Wood's tech bets. But that momentum hit hard in March and April, with the funds trailing the market as top holdings slid amid growing concerns over the macroeconomy and trade policies. Now, the fund is regaining momentum. As of July 25, the flagship Ark Innovation ETF (ARKK) is up 33.3% year-to-date, far outpacing the S&P 500's 8.6% gain. Wood's remarkable return of 153% in 2020 helped build her reputation and attract loyal investors. Her strategy can lead to sharp gains during bull markets but also painful losses, like in 2022, when ARKK tumbled more than 60%. As of July 25, Ark Innovation ETF, with $6.8 billion under management, has delivered a five-year annualized return of negative 0.03%. The S&P 500 has an annualized return of 16.46% over the same period. Wood's investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics. According to Wood, these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values. Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income The Ark Innovation ETF wiped out $7 billion in investor wealth over the 10 years ending in 2024, according to an analysis by Morningstar's analyst Amy Arnott. That made it the third-biggest wealth destroyer among mutual funds and ETFs in Arnott's ranking. Wood recently said the U.S. is coming out of a three-year "rolling recession" and heading into a productivity-led recovery that could trigger a broader bull market. In a letter to investors published in late April, she dismissed predictions of a recession dragging into 2026 and struck an optimistic tone for tech stocks. "During the current turbulent transition in the US, we think consumers and businesses are likely to accelerate the shift to technologically enabled innovation platforms including artificial intelligence, robotics, energy storage, blockchain technology, and multiomics sequencing," she said. But not all investors share this optimism. Through July 10, the Ark Innovation ETF saw nearly $2 billion in net outflows over the past 12 months, according to ETF research firm VettaFi. On July 24, the day when Tesla (TSLA) dropped 8.2% following its second-quarter earnings, Wood's Ark funds snapped up 143,190 shares worth around $45.3 million. This was one of Wood's largest recent purchases. Tesla's Q2 earnings were quite dismal. The electric vehicle maker reported a 16% drop in automotive revenue as vehicle sales declined for the second straight quarter. Related: Analysts turn heads with new Alphabet stock price target after earnings The company posted adjusted earnings of 40 cents per share, missing the 43 cents expected. Revenue came in at $22.50 billion, slightly below the $22.74 billion forecast. "We probably could have a few rough quarters. I am not saying that we will, but we could," CEO Elon Musk said. Tesla is grappling with growing challenges, from the rise of lower-cost electric vehicle competitors, especially in China, to a political backlash against Musk that has damaged the brand in the U.S. and Europe. But that hasn't stopped Wood, a longtime supporter of Tesla, from doubling down. "We've been dealing with controversy around Elon Musk in one form or another since we first bought the stock," Wood said in a recent interview with Bloomberg. "We do trust the board and the board's instincts here and we stay out of politics." She also noted that Musk seems more focused on the business again, especially after he decided to take charge of sales in the US and Europe. "One of the announcements Elon made recently is that he is going to oversee sales in the US and in Europe," Wood said. "When he puts his mind on something, he usually gets the job done. So I think he's much less distracted now than he was, let's say, in the White House 24/7." Back in March, Wood predicted Tesla's stock would reach $2,600 in five years, which is nearly nine times higher than where it trades now. Much of the optimism is driven by the company's highly anticipated robotaxi, which Wood believes will account for 90% of the company's value. Musk said during the earnings call that Tesla's robotaxi service, which the company has recently started testing in Austin, Texas, will expand to other states, with a goal of covering half the U.S. population by year-end pending regulatory approvals. "That's at least our goal, subject to regulatory approvals. I think we will technically be able to do it," he said. Tesla stock is down more than 21% year-to-date. The stock has long been Wood's biggest holding, accounting for 9.6% of the Ark Innovation ETF. Related: Analysts unveil bold Amazon stock price target before earnings The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Business Insider
31 minutes ago
- Business Insider
Tesla (TSLA) Delays Optimus Robot Amid Production and Leadership Setbacks
Tesla (TSLA) is facing production delays in its Optimus humanoid robot project. The company had planned to build 5,000 units in 2025, but has only produced a few hundred. According to reports, the main issue is the robot's hand and arm components, which remain underdeveloped, leaving many units incomplete on factory floors. Tesla stock is down 21% year-to-date. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Optimus Faces Delays Amid Technical and Leadership Setbacks During the company's second-quarter earnings call, CEO Elon Musk acknowledged the challenges and scaled back expectations. He now expects production of the updated Optimus 3 model to begin in early 2026. Musk still sees long-term potential, calling the goal of one million units per year within five years 'a reasonable aspiration.' He added that he would be 'shocked' if Tesla is not producing 100,000 units per month by 2030. Production was paused in mid-June to address hardware issues. Joint motors have been overheating, and current batteries often fall short in terms of durability. The robot's hands, a critical piece for dexterity, lack the strength and reliability needed for repetitive tasks. Tesla is testing new materials and working with multiple suppliers to find a solution. Leadership turnover has also slowed momentum. Milan Kovac, who ran the program, left in June. Ashok Elluswamy, previously head of Tesla's Full Self-Driving division, is now leading the effort. In related news, earlier in June, Tesla filed a lawsuit against one of its former engineers and his robotics startup, accusing them of stealing trade secrets related to the design of the Optimus hand. Tesla is counting on new business lines as its core automotive segment faces pressure. The company reported a 12% decline in revenue and a 16% drop in vehicle sales for Q2 2025. U.S. EV tax incentives are fading, and competition from General Motors (GM), Hyundai (HYMLF), and others is growing. Tesla is betting on robotics and AI to drive future growth, but for now, Optimus remains a long-term play. Is Tesla a Buy, Sell, or Hold? On the Street, Tesla currently boasts a Hold consensus rating from Wall Street analysts based on 35 reviews. The average price target stands at $314.14, suggesting a potential downside of 0.61%.
Yahoo
an hour ago
- Yahoo
Tech Earnings, Tariff Deadline and Other Key Things to Watch this Week
Markets face a pivotal week as the S&P 500 ($SPX) (SPY) navigates a perfect storm of Federal Reserve policy decisions, mega-cap technology earnings, and critical trade developments. The Federal Reserve is widely expected to stand pat on rates Wednesday, but Fed Chair Jerome Powell's press conference could provide crucial hints about upcoming policy moves amid evolving economic conditions. President Trump's August 1 deadline for new major tariff hikes creates additional uncertainty, with potential European Union trade deals hanging in the balance and U.S.-China trade talks scheduled for early in the week. The convergence of Friday's employment report with the tariff deadline adds another layer of complexity for investors parsing economic data and policy implications. Meanwhile, Tesla (TSLA) appears ready to expand its ride-hailing service to San Francisco, though the "robotaxi" deployment would still require human safety drivers behind the wheel. Here are 5 things to watch this week in the Market. More News from Barchart The Saturday Spread: Leveraging Practical Math to Extract Alpha in Hidden Places Alphabet Posts Lower Free Cash Flow and FCF Margins - Is GOOGL Stock Overvalued? Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Fed Decision and Powell's Policy Guidance Wednesday's Federal Reserve meeting at 2pm takes center stage, with the central bank widely expected to maintain current interest rates while markets focus intensely on Chair Powell's 2:30pm press conference for policy direction clues. The Fed statement and Powell's commentary will be scrutinized for any evolution in thinking about inflation progress, labor market conditions, and the economic outlook amid recent mixed data. Wednesday's Q2 GDP report at 8:30am will provide fresh context for the Fed's assessment, while Thursday's Core PCE Price Index—the Fed's preferred inflation measure—could influence future policy considerations. Powell's response to questions about trade policy impacts, tariff-related inflation risks, and the central bank's reaction function will be particularly important given the August 1 tariff deadline. Any hints about the timing of future rate adjustments could trigger significant volatility across rate-sensitive sectors including technology, utilities, and financials. Magnificent Seven Earnings Extravaganza The week delivers a blockbuster lineup of mega-cap technology earnings with Microsoft (MSFT) and Meta (META) reporting Wednesday, followed by Apple (AAPL) and Amazon (AMZN) Thursday. Microsoft's results will provide important insights into cloud computing growth, AI investment returns, and productivity software demand. Meta's earnings will be closely watched for social media advertising trends, Reality Labs performance, and AI infrastructure spending. Apple's quarterly results will offer perspective on iPhone demand, Services revenue growth, and the company's performance in key international markets amid trade tensions. Amazon's report will provide insights into e-commerce trends, AWS cloud growth, and advertising revenue momentum. The collective results from these market leaders could significantly influence technology sector performance and broader market sentiment, particularly given their outsized impact on major indices. Trade Deadline Drama and Economic Implications President Trump's August 1 deadline for implementing new major tariff hikes creates a precarious inflection point that coincides with Friday's employment report, potentially amplifying market reactions to both trade and economic developments. Early-week U.S.-China trade talks could provide clarity on the scope and timing of additional trade restrictions, while potential European Union trade deals remain in flux. The tariff deadline's convergence with the jobs report creates a complex backdrop for interpreting labor market data and assessing economic resilience. Companies with significant international exposure, particularly those with European operations or Chinese supply chains, could face heightened volatility as investors assess the potential impact of new trade restrictions. The market's reaction will likely depend on the actual implementation of tariffs versus the threatened timeline, with sectors including technology, automotive, and consumer goods particularly sensitive to trade policy developments. Employment Report and Economic Momentum Friday's July employment report at 8:30am represents the week's most consequential economic release, providing nonfarm payrolls, unemployment rate, and average hourly earnings data that could influence both Fed policy expectations and trade policy reactions. Wednesday's ADP employment report at 8:15am will offer an early preview of private sector hiring trends, while Tuesday's JOLTS job openings data will provide additional labor market context. The employment figures take on added significance given their release on the same day as Trump's tariff deadline, creating potential for amplified market reactions if job growth shows unexpected strength or weakness. Average hourly earnings will be particularly scrutinized for wage inflation signals, while the unemployment rate could influence Fed policy expectations. Thursday's initial jobless claims will round out the employment picture, providing the latest snapshot of labor market health ahead of the comprehensive monthly report. Corporate America's Health Check Beyond the mega-cap technology names, the week features several key earnings that will provide insights into different sectors of the economy. UnitedHealth (UNH) Tuesday will offer perspective on healthcare trends and medical cost inflation. Boeing (BA) Tuesday will provide updates on aerospace manufacturing and commercial aircraft demand. Visa (V) Tuesday will offer insights into consumer spending patterns and payment processing trends. Procter & Gamble (PG) Tuesday will provide perspective on consumer staples demand and pricing power amid economic uncertainty. The convergence of these diverse earnings results with major economic data creates potential for significant sector rotation as investors assess relative strength across different areas of the market and parse management commentary about trade impacts and economic conditions. Best of luck this week and don't forget to check out my daily options article. On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
