Bulls vs. Bears: SA analysts weigh in on Tesla’s earnings after record rally

Seeking Alpha analysts offered diverse views on Tesla (NASDAQ:TSLA) as the EV maker’s shares closed at the highest level in more than a year on Friday on the back of its better-than-expected Q3 earnings.

The Elon Musk-led company after hours on Wednesday posted one of its strongest quarterly reports in a while and projected as much as 30% deliveries growth in 2025. Investors reacted by sending the stock ~22% higher on Thursday, its best one-day rally in over a decade.

After the record-breaking rally, SA analysts and Investing Group Leaders commented on Tesla (NASDAQ:TSLA), with its valuation, growth and profitability dominating the debate.

The Bulls

“Tesla provided a positive outlook for their vehicle production and delivery for FY24, which could become a major catalyst for their stock price,” wrote Hunter Wolf Research in Tesla Q3: Positive Outlook For EV Recovery. “I believe Tesla will sustain 25% revenue growth due to progress in Cybertruck production, AI-based FSD software, and energy transformation.”

“Tesla’s valuation could rise significantly, potentially reaching a fair value of $293 per share, driven by delivery gains and improved profitability,” said The Asian Investor in Tesla Q3: Elon Musk Teaches The Market A Lesson. “Key risks include a potential failure to meet delivery growth expectations.”

Meanwhile, Investing Group Leader Victor Dergunov wrote in Tesla: Profitability Increases Should Drive Stock Higher: “Tesla remains a strong buy due to its market-leading position, substantial growth prospects, and potential for higher-margin business activities. Tesla’s improved efficiency and profitability metrics suggest potential for upward EPS revisions and stock price upgrades to the $300-350 range by 2025.”

The Bears

“Despite positive Q3 2024 results, Tesla, Inc.’s reliance on non-sustainable sources like regulatory credits and stock-based compensation makes its current valuation unjustifiable,” argued Eugenio Catone in Tesla: Look Beyond Appearances. “A strong sell rating was maintained due to erratic cash flows, lack of buybacks, and stalling R&D spending despite substantial cash reserves.”

“At current valuations, Tesla stock is simply not worth the investment,” added Nexus Research in Tesla: Sell The Rally, Autonomous Robots Do Not Justify Sky-High Valuation. “Another top-performing stock is much more advantageously positioned to win big from the robotics secular growth story.”

“Tesla faces growing risks due to Elon Musk’s political alignment, impacting its primary markets and consumer perception negatively,” wrote Investing Group Leader The Value Portfolio in Tesla Faces Major Risks In The Future. “With recent developments around the election along with the company’s FSD event, we see risks increasing.”