Fed’s Powell opens door to potential rate cuts at Jackson Hole
On Wednesday, William Blair maintained an Outperform rating on Tesla stock (NASDAQ:TSLA), with the firm’s analysts highlighting several key factors influencing the automaker’s prospects. Tesla shares saw an uptick following Elon Musk’s announcement that he would be reducing his time spent on government affairs as the integration of Dogecoin (DOGE) nears completion. According to InvestingPro data, Tesla stock has shown significant volatility, with a beta of 2.58 and a 64% return over the past year, making it crucial for investors to stay informed about the company’s developments. The management team addressed potential brand damage and emphasized the unprecedented success of converting all factories to produce the new Model Y within a single quarter.
Tesla’s response to tariffs was also a point of discussion. Despite Elon Musk’s opposition to tariffs, analysts believe Tesla is well-positioned to handle such trade barriers due to its American manufacturing, vertical integration, and localized supply chains. Secretary of Treasury Scott Bessent’s remarks on de-escalation and diplomacy were noted as crucial for the macro environment, which Tesla’s story and stock are still heavily reliant upon.
The energy division of Tesla reported record profits this quarter, contributing a significant 25% to the company’s total. The demand for both Megapack and Powerwall 3 continues to exceed supply, with both products currently sold out. With total revenue reaching $97.69 billion and a healthy current ratio of 2.02, InvestingPro analysis shows Tesla maintains strong financial health to support its growing energy business. However, the reliance on lithium iron phosphate (LFP) batteries from China for these energy products makes them susceptible to the impact of tariffs. Discover 18 more key financial insights about Tesla with an InvestingPro subscription. Analysts expressed concerns about supply issues and the ability of Tesla to pass on cost increases to customers without causing significant delays or cancellations.
In a surprising revelation, Tesla indicated that instead of developing a new, lower-cost Model 2 hatchback, future affordable models would be simplified versions of the existing Model 3 and Model Y. This strategic decision reflects Musk’s focus on autonomous vehicles, robotaxis, and humanoid robots.
In terms of valuation, Tesla stock is currently trading at an enterprise value (EV) of 38 times William Blair’s revised 2026 EBITDA estimate. This represents a pullback from the recent peak of 64 times but still commands a premium compared to the 15 times average of technology peers. Current InvestingPro metrics show Tesla trading at an EV/EBITDA multiple of 61.1 and a P/E ratio of 111.7, with analysis indicating the stock is currently overvalued relative to its Fair Value. The report concluded that Tesla’s stock valuation has historically been a premium, and as market expectations are recalibrated, the momentum for Tesla shares is expected to recover.
In other recent news, Tesla reported first-quarter revenue of $19.3 billion, which fell short of both Benchmark’s projection of $24.9 billion and the consensus estimate of $20.1 billion. Despite this, Tesla’s gross margin aligned with the consensus at 16%, surpassing Benchmark’s estimate of 12%. Analyst firms have varied in their evaluations, with Benchmark maintaining a Buy rating and a $350 price target, citing Tesla’s strategic initiatives like the Robotaxi business and Optimus robots as promising. Meanwhile, Cantor Fitzgerald adjusted its price target to $355 from $425, maintaining an Overweight rating but expressing caution due to global macro uncertainties. Wedbush Securities raised its price target to $350, highlighting Elon Musk’s recommitment to Tesla as a positive factor for the company’s future. Oppenheimer reiterated a Perform rating, focusing on Tesla’s technological advancements and operational challenges, while Canaccord Genuity lowered its price target to $303, maintaining a Buy rating based on Tesla’s potential for long-term growth. These developments reflect a mix of optimism and caution among analysts as Tesla navigates its strategic and operational landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.