Elon Musk’s latest headline-grabbing move—a $97.4 billion bid for OpenAI—has sent shockwaves through the tech world. While Musk aims to bring OpenAI back to its original mission, Tesla (NASDAQ:TSLA) investors are left wondering if his divided attention will impact the electric vehicle (EV) giant’s future. This Tesla stock analysis examines recent earnings, valuation, and analyst sentiment to determine whether TSLA is still a buy.
Tesla’s Position in the Market
Tesla (NASDAQ:TSLA) has long been a leader in the EV space, dominating battery-powered car sales in the U.S. and expanding into artificial intelligence (AI) and robotics. Despite this, its stock recently tumbled over 5% following Musk’s OpenAI bid. With increasing competition and slowing demand, some investors question whether Tesla’s dominance is fading.
Over the past year, TSLA stock surged 90.6%, but its valuation remains steep. The stock trades at 117.46 times non-GAAP forward earnings and 9.67 times sales—far above industry averages. Yet, it is still cheaper than its historical norms.
Q4 Earnings: A Reality Check
Tesla’s Q4 2024 earnings report fell short of expectations, reflecting a slowdown in the EV market.
Revenue: $25.7 billion (+2% YoY), missing the $27.1 billion estimate
Automotive Sales: $19.8 billion (-8% YoY) due to price cuts
Adjusted EPS: $0.73, falling 4.8% short of analyst projections
Tesla slashed prices across its Model 3, Y, S, and X lineup to boost demand, but this strategy cut into revenue. Despite these setbacks, Musk remains optimistic, predicting an “epic” 2026 and a “ridiculously good” 2027 and 2028, fueled by AI and autonomous driving advancements.
Analyst Sentiment: A Mixed Bag
Tesla stock has a consensus “Hold” rating from Wall Street analysts. Among 38 analysts:
12 recommend a “Strong Buy”
2 suggest a “Moderate Buy”
14 advise a “Hold”
10 lean toward “Strong Sell”
Morgan Stanley’s Adam Jonas, a long-time Tesla bull, removed TSLA from his “Top Pick” list but maintained a $430 price target with an “Overweight” rating. Meanwhile, Stifel analyst Stephen Gengaro cut his price target from $492 to $474, citing political uncertainty and weakening consumer sentiment.
Tesla stock’s average price target stands at $338, below current levels, but the most bullish forecasts see it rising as high as $550—a potential 60% upside.
The OpenAI Factor: A Distraction for Musk?
Musk’s renewed focus on AI raises questions about his commitment to Tesla. The company has already shifted from being a pure EV manufacturer to an AI-driven innovator in robotics and autonomous driving. However, concerns persist that Musk’s divided attention—especially with ventures like xAI—could impact Tesla’s execution.
Final Verdict: Buy, Sell, or Hold?
This Tesla stock analysis highlights the company’s strengths and risks. While Tesla remains a leader in EVs and AI, slowing sales, aggressive price cuts, and Musk’s external distractions create uncertainty. Analysts are divided, with price targets ranging widely.
For long-term investors betting on AI and robotics, Tesla may still hold promise. However, short-term volatility could present challenges. Whether to buy, sell, or hold depends on your risk tolerance and belief in Tesla’s ability to navigate an evolving landscape.
Final Thoughts: Is Tesla Stock Worth the Risk?
Tesla remains a force in the EV and AI sectors, but its recent struggles highlight the challenges of maintaining dominance in a competitive market. Investors must weigh Musk’s ambitious vision against near-term headwinds, including slowing demand, price cuts, and rising competition from legacy automakers and Chinese EV giants.
While some analysts see Tesla’s AI advancements as a game-changer, others worry about its high valuation and Musk’s divided attention. Long-term believers in Tesla’s innovation may see the recent dip as a buying opportunity, while cautious investors might wait for clearer signs of growth before making a move.
Featured Image: Pexels © Craig Adderley
