We recently published 10 Stocks Wall Street is Watching Heading into October. Tesla, Inc. (NASDAQ:TSLA) is one of the stocks Wall Street is watching.
Tesla posted strong Q3 delivery numbers on Thursday, but many analysts believe the company will not be able to see robust demand in the coming quarters. Tesla’s delivery numbers saw a boost because customers scrambled to buy EVs ahead of the expiration of tax credits.
CFRA’s Garrett Nelson said in a program on Schwab Network on August 15 that he does not see “any” upside for Tesla shares amid concerns about the EV maker’s sales growth and an expected hit to its profitability. Here is what the analyst said:
“Our big concern is looking out over the next 12 months. Tesla, we thought it was refreshing that Elon Musk sort of conceded that the company is going to have a rough few quarters ahead in terms of earnings. While we think Q3 is going to be relatively strong, we’re really more concerned about Q4 and then into the first half of next year. After the federal EV tax credit expires at the end of September, I think Tesla is very susceptible to a pretty significant drop in sales. So really, that’s our big concern with the stock. Of course, there’s so much nuance with this company, lots of puts and takes, but looking out over the next 12 months, which is the basis of our price target, we just don’t see any upside for this stock, considering the headwinds—not only the expiration of the federal EV tax credit, but the regulatory credits, which have been such a big profit driver for Tesla in recent years. Essentially 100% margin on the sale of these regulatory credits—that whole system is going away as well. So that’s going to be a big hit to their profitability.”
Photo by Tesla Fans Schweiz on Unsplash
Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
Baron Focused Growth Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its second quarter 2025 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells electric vehicles (EVs), solar products, and energy storage solutions, while also developing advanced real-world AI technologies. Despite ongoing macroeconomic challenges and regulatory complexities, shares climbed after Tesla completed a limited commercial rollout of its highly anticipated robotaxi business in Austin—following more than a decade of development and billions of dollars in investment. This milestone signals a potentially transformative shift in the automotive industry and opens up a sizable new market beyond the company’s core operations. Investor sentiment also improved after Elon Musk stepped back from government-related engagements, boosting confidence in Tesla’s near-term execution. Tesla introduced a refreshed Model Y globally, featuring design and performance upgrades, and outlined plans to unveil new mass-market models starting next quarter. Meanwhile, the company is progressing toward scaling production of its humanoid robot, adding another dimension to its long-term growth story.”
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Disclosure: None. This article is originally published at Insider Monkey.
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