Tesla TSLA released its second-quarter earnings report on July 23. Here’s Morningstar’s take on Tesla’s earnings and stock.
Key Morningstar Metrics for Tesla
- Fair Value Estimate: $250
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
What We Thought of Tesla’s Earnings
Tesla reported lower second-quarter earnings driven by a decline in deliveries. Management did not provide deliveries guidance for the year but did say the affordable vehicle will enter production in the fourth quarter. Tesla shares were down 5% in after-hours trading on the results.
Why it matters: Management initially guided for deliveries growth in 2025. We interpret no guidance as a signal that management is no longer forecasting volume growth. This aligns with our expectation for deliveries to decline in 2025.
- The affordable vehicle will enter production during the fourth quarter of the year. This supports our view that the affordable vehicle will ramp up production in 2026.
The bottom line: We maintain our $250 fair value estimate for narrow-moat Tesla. At current prices, we view Tesla shares as overvalued with the stock trading in 2-star territory at a little less than 30% above our fair value estimate.
- We reduced our near-term outlook for Tesla as we forecast the company will be affected by the expiration of the US EV tax credit this year. Separately, we raised our valuation for the Optimus humanoid robot business, as Tesla is testing this new product.
Long view: Management aims to transition Tesla to an artificial intelligence software and robotics company from autos as the primary business today. We think Tesla will successfully launch its new business ventures, including robotaxis and humanoid robots.
- Tesla began testing its robotaxis earlier this month, with extra safety features that include a Tesla employee in the front passenger seat and operation limited to a geofenced area. We view this as a sign Tesla is still in the early testing stage for the autonomous driving software.
- Management maintained its view for Cybercab robotaxis to enter production in 2026. We think the software will require further testing and do not expect a full robotaxi product until 2028, with no Tesla employees in the vehicle and no geofence.
