To The Moon

$Tesla Motors(TSLA)$ is scheduled to release its Q2 2025 earnings after market close on Wednesday, July 23, 2025. Current analyst consensus suggests a challenging quarter for Tesla.

Revenue: Expected to be around $22.8 billion, representing an approximately 11% decline year-over-year from Q2 2024. This is a continuation of the trend seen in Q1 2025, where revenue also declined.

Adjusted EPS (Earnings Per Share): Consensus is around $0.43, a significant drop from $0.52 in Q2 2024 and $0.27 in Q1 2025. This would mark one of Tesla's weakest earnings per share in years.

Tesla (TSLA) Fiscal Q1 2025 Earnings: A Summary and Key Lessons from Guidance

Tesla's first fiscal quarter of 2025, ending March 31, 2025, presented a mixed financial picture, with significant declines in traditional automotive metrics but continued strong performance in its energy sector and a reaffirmed commitment to its ambitious future ventures.

Q1 2025 Earnings Summary:

Revenue: Total revenues decreased 9% year-over-year to $19.3 billion. Automotive revenues, the largest segment, saw a sharper decline of 20% year-over-year, reaching $13.967 billion.

Profitability: GAAP operating income fell 66% year-over-year to $0.4 billion, resulting in a 2.1% operating margin. Non-GAAP Earnings Per Share (EPS) was $0.27, missing analyst expectations.

Production & Deliveries: Vehicle production was over 362,000 units (down 16% year-over-year), and deliveries were over 336,000 units (down 13% year-over-year), marking the weakest quarterly delivery performance in three years. These figures were impacted by the Model Y changeover across all factories and a reduced average selling price (ASP).

Energy Business: A bright spot was the Energy Generation and Storage segment, which saw revenues increase by 67% year-over-year to $2.73 billion. The company deployed 10.4 GWh of energy storage products, achieving a record quarter for Powerwall deployments.

Financial Health: Tesla maintained a healthy balance sheet with $37 billion in cash, cash equivalents, and investments, supported by a positive free cash flow of $0.7 billion.

Costs: Operating expenses increased due to investments in AI and other research and development (R&D) projects.

Factors Influencing Q1 Performance:

The decline in automotive performance was primarily attributed to the Model Y production line changeover across its global factories, reduced vehicle ASPs, and increased operating expenses related to AI and R&D. The company also highlighted rising uncertainty in the automotive and energy markets due to evolving trade policies and geopolitical factors impacting global supply chains and cost structures.

Lessons Learned from Guidance:

Tesla chose not to provide a fresh full-year 2025 growth outlook in Q1, indicating that the growth rate would depend on various factors, including the pace of autonomy efforts, production ramp-ups, and the broader macroeconomic environment. This decision underscores a key lesson: Tesla's immediate future is susceptible to external macroeconomic and geopolitical pressures, as well as internal production transitions.

However, the guidance also emphasized Tesla's long-term vision and strategic priorities, offering valuable insights:

Long-Term Vision Beyond Automotive Sales: The company reiterated that its more affordable EV models remain on track for introduction in the first half of 2025. Crucially, Tesla underlined its commitment to autonomous driving and humanoid robots (Optimus) as fundamental pillars of its future value. Elon Musk stated that the value of autonomous driving would become "significantly apparent" within the next one to two years, and he expects thousands of Optimus robots to be working in Tesla factories by the end of 2025, with plans to scale to millions of units annually in less than five years.

Shifting Investor Focus: Despite the earnings miss on traditional automotive metrics, Tesla's stock price saw an increase post-earnings, suggesting that market sentiment is increasingly bullish on the potential of these future ventures (Robotaxi and affordable EVs), rather than solely on current vehicle sales.

Navigating External Headwinds: Tesla acknowledged the potential "relatively larger impact" of current tariff landscapes on its energy business, particularly due to its reliance on Chinese-supplied LFP battery cells. However, the company is actively pursuing actions to stabilize the business and expects to be less affected by tariffs than other automakers due to its diversified supply chain and localized manufacturing.

The lesson from Tesla's Q1 2025 guidance is that while the company faces short-term volatility and challenges related to market dynamics and production transitions, its strategic focus and perceived long-term value are increasingly tied to its advancements in AI, autonomous technology, and robotics. Investors are encouraged to look beyond immediate financial results and consider the potential of these transformative technologies to drive future growth and profitability.

Analysis of Q2 2025 Earnings Expectations:

Vehicle Deliveries and Production: Tesla already reported Q2 deliveries of 384,122 vehicles, a 13.5% year-over-year decline and the steepest quarterly decline in the company's history. Production was 410,244 vehicles, flat year-over-year.

Automotive Gross Margins: This is a critical metric. After dipping to 16.3% in Q1 2025 from 18.3% in Q2 2024, the expectation is for it to stabilize at around 16.44% in Q2 2025. Further erosion due to price cuts will be closely watched.

Energy Storage and Services Revenue: These segments are expected to provide some offset to the automotive weakness. Energy storage deployed 9.6 GWh in Q2, and investors will look for strong gross profits in this area and updates on the Shanghai Megapack factory.

Key Factors Driving Expectations and Investor Focus:

Weak EV Demand and Competition: The overall EV market is facing headwinds, and Tesla is experiencing increasing competition, particularly from Chinese automakers.

Price Cuts: Tesla's strategy of aggressive price cuts to stimulate demand has impacted its profit margins.

Loss of EV Tax Credits: The end of some EV tax credits in key markets (like the US) has added pressure to sales.

CEO Elon Musk's Commentary and Strategic Updates: Beyond the raw numbers, investors will be keenly focused on Elon Musk's comments during the earnings call, especially regarding:

2025 Guidance: Tesla withdrew its full-year 2025 growth outlook in Q1 and promised to revisit it in Q2. Any new guidance on annual deliveries (analysts currently estimate 1.35 to 1.66 million vehicles for 2025, down from 1.79 million in 2024) will be a major catalyst.

Robotaxi and FSD (Full Self-Driving) Progress: Updates on the robotaxi rollout (launched in Austin, TX, in June 2025) and advancements in FSD technology are crucial for Tesla's long-term growth narrative and investor sentiment. The market views Tesla as an AI play disguised as an auto company, so progress in this area is vital for its high valuation.

Affordable Vehicle Production: Updates on the expected start of production for a lower-priced car (anticipated in H1 2025) will be significant.

Geopolitical and Regulatory Impact: Commentary on tariffs and any political backlash affecting demand will also be closely monitored.

Key Metrics Investors Should Watch:

Revenue and EPS: Are the reported figures better or worse than the consensus estimates ($22.8 billion revenue, $0.43 adjusted EPS)?

Automotive Gross Margins: Any significant deviation from the expected 16.44% will heavily influence sentiment.

Future Guidance (Deliveries, Production, and Margins): This is arguably the most important metric for short-term trading post-earnings. A clearer, more optimistic outlook for H2 2025 and beyond could significantly boost the stock. Conversely, further withdrawal or a more conservative outlook could lead to a sell-off.

Updates on Robotaxi/FSD: Concrete progress and a compelling vision for these initiatives could overshadow weak automotive numbers.

Energy Generation & Storage Segment Performance: Look for continued growth and profitability in this segment, as it's a diversification away from the struggling core automotive business.

Free Cash Flow (FCF): While Q1 FCF fell significantly, investors will want to see if this trend reverses or stabilizes.

Tesla (TSLA) Price Target

Based on 43 analysts from Tiger Brokers offering 12 month price targets for Tesla in the last 3 months. The average price target is $296.81 with a high forecast of $500.00 and a low forecast of $19.05. The average price target represents a -9.64% change from the last price of $328.49.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at how TSLA share price have moved after its Q1 earnings, even though the RSI momentum is in the negative, the investors sentiment was driven by TSLA comments, and hence, we will need to focus on looking at an update on the progress for Tesla’s AI and Robotaxi for the Q2 earnings.

Currently, TSLA is in a positive upward momentum, which should gather much strength as we moved closer to its fiscal Q2 earnings, I am expecting a surprise gap up, though vehicle numbers might not be something investors would focus on.

Opportunities for Trading Short-Term Post-Earnings:

Tesla's stock is known for its high volatility post-earnings. Options pricing suggests a move of approximately 7% ($22) in either direction from Monday's close near $329 by the end of this week's trading sessions.

High Volatility Play: Given the expected volatility, traders often use options strategies like straddles or strangles, which profit from large price movements regardless of direction. However, implied volatility is often high going into earnings, which makes these strategies expensive.

Reaction to Guidance: The primary driver for short-term price movement will likely be Tesla's updated 2025 guidance and commentary on its future initiatives (robotaxi, affordable car).

Upside Potential: If Tesla provides more optimistic guidance than anticipated, or if Elon Musk delivers a convincing narrative about the future of robotaxis and AI that shifts investor focus away from current automotive weakness, the stock could see a significant rally. Positive surprises in energy storage or unexpected improvements in margins could also provide a boost.

Downside Risk: If the guidance is worse than expected, or if there are no concrete updates on future initiatives to distract from the current challenges in the EV market, the stock could experience a sharp decline. Continued margin compression or further signs of weakening demand would also be bearish.

"Sell the News" vs. "Buy the Dip": With expectations already low and deliveries reported as dismal, some analysts believe the bad news is already priced in, potentially leading to a "buy the dip" scenario if the earnings aren't worse than feared, especially if the future narrative is strong. Conversely, if Musk fails to "sell the future" convincingly, it could be a "sell the news" event.

Technical Levels: Watch for key support and resistance levels. A sustained break above downtrend resistance (around $347 based on recent analysis) could signal a rally, while a break below recent lows could accelerate a decline.

Important Considerations for Short-Term Trading:

High Risk: Trading TSLA post-earnings is inherently high-risk due to its volatility and the unpredictable nature of Elon Musk's commentary.

Event-Driven Trading: This is an event-driven trade. Your success will largely depend on correctly anticipating the market's reaction to the earnings report and forward-looking statements.

Risk Management: Always employ strict risk management, including stop-loss orders, when engaging in short-term post-earnings trading.

Summary

Q2 2025 is expected to be a weak quarter for Tesla in terms of traditional automotive metrics. The market will be looking past these numbers to the updated 2025 guidance and, more importantly, to the progress and vision for Tesla's AI, robotaxi, and next-generation vehicle plans. The post-earnings call, particularly Elon Musk's statements, will be critical in determining short-term price action.

Appreciate if you could share your thoughts in the comment section whether you think TSLA could provide an earnings surprise given that market is expecting a weak quarter due to traditional automotive metrics.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.