Hi YXI friends,

Trading TSLA is not for the faint of heart.

Executing Tesla’s grand vision is a million times harder, arguably impossible except for only one person on this planet. But if anyone could pull it off, it would be Elon Musk.

However, even the greatest can struggle (often!).

The 2025 Q2 earnings were not pretty, although above the Wall Street estimates. Elon sounded like he hadn’t slept for a while, but was very calm on the call. If the Q1 earnings were a story of semi-bluffing, then Q2 earnings actually sounded quietly confident to me. To Elon, Tesla’s domination in real-world, physical AI is a question of when, not if.

Shares are selling off as I write this, but it is exactly why you must read my report today.

Below, I highlight not only Tesla’s earnings performance and busines targets, but also a key scenario analysis for 2030. If you consider trading Tesla shares, it is likely very helpful to know how the stock price could unfold under different business projections. Skip straight to section 4 if this is most interesting to you.

Finally, I offer my technical chart analysis to highlight Tesla’s potential price path.

Let’s dive in!

Table of Contents

• 1. Tesla Business Highlights

• 2. Profitability Margins

• 3. Tesla Valuation

• 4. 2030 Scenario Analysis

• 5. Technical analysis

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Tesla Business Highlights

Tesla Business Segments

While TSLA the stock trades on the future promise of the Robotaxi Network and Optimus, Tesla the business gains 74% of its revenue from its cars. The automotive revenues can be further divided into automotive sales, regulatory credit, and automotive leasing.

Energy generation and storage is a growing segment that Musk cares a lot about, but it currently weighs just 12% of the total revenue. The remaining 14% revenue comes from services.

Quarter Segment Performance

Unfortunately, it has been a (largely expected) poor quarter for Tesla.

Automotive sales dropped 15% YoY to $15.7 billion. Automotive regulatory credits are down by half, although increasingly an irrelevant source of income for Tesla.

Energy generation and storage declined by 7% YoY to $2.8 billion, although off a fast growing base in 2024.

Services and other grew by 17%.

One Big & Beautiful Bill

The Big and Beautiful Bill will end the IRA EV credit ($7,500). This will adversely affect Tesla’s demand, although customers could be rushing to purchase before the deadline on September 30.

The Bill also ends consumer credits for residential storage by year-end. This could negatively impact the energy business.

Tesla Deliveries

Tesla’s deliveries in Q2 dropped by 13% YoY, but grew by 14% sequentially. However, this is a well known line item tracked at the beginning of each new quarter.

On the earnings call, Musk highlighted that Model Y is dominating markets including Turkey, Netherlands, Switzerland, and Austria. Tesla’s team also confirmed there will be a new affordable model in Q4.

Below is the line by line changes for each key metric YoY.

The only items that are up from the previous year are the number of Tesla locations and Supercharger stations.

Now onto the overall financials.

Quarterly Revenue

Tesla’s Q2 revenue dropped by 12% YoY, a worsening of the -9% in Q1.

Trailing Twelve Month (TTM) Revenue

The TTM Revenue is dragged into the negative growth territory as well. If TSLA trades like a normal stock (but it doesn’t), a slowing revenue tends to reduce the valuation multiple the stock deserve.

That of course is dependent on the overall macro environment and investor sentiment. Some shares could defy this gravity if there is a lot of market liquidity or a compelling enough narrative for future world domination.

Robotaxi, FSD, Optimus

I think it’s fair to call the Austin robotaxi rollout so far as “mission success” by and large.

The service area has expanded quickly since the initial rollout, although it was immaturely eye-catching (for viral news headlines).

On the earnings call, Musks confirmed the plan to operate robotaxi services covering half the US population by year-end, pending regulatory approval.

For FSD, there has been a 10x increase in AI model parameter count. The FSD adoption rates have increased by 25% since version 12 launch.

For wider FSD adoption, Tesla is seeking regulatory approvals for supervised FSD in Europe and China.

For Optimus, Musk floats a 5-year goal of making 1 million units annually. The vision will be for it to be the most popular product ever, as everyone in the world will want one.

On the Tesla x Xai acquisition potential, Musk has not ruled it out. Instead, if the shareholders want this deal to happen, they could table it for a vote.

2. Profitability Margins

Tesla’s margins

Tesla’s gross margin ticked higher sequentially to 17.2%, although still lower than a year ago.

The Q2 operating margin came in at 7.2%, one percent higher than a year ago but lower than Q1.

Tesla’s free cash flow became due to higher CapEx and negative changes in the net working capital. Tesla’s quarterly CapEx is now 10.6% of its revenue, higher than both last year and the previous quarter.

3. Tesla Valuation

TSLA P/S and P/E (NTM)

For a flat-growth company, TSLA trades at outrageous valuation levels, whether it’s 10x P/S or 159x P/E.

However, the P/S is only 10% above its 5-year historical mean and P/E 60% above.

Clearly, the stock price doesn’t trade on the existing fundamentals. If you short TSLA here and pray for the valuation to go down to 3x P/S, you should be aware that the stock could move significantly against you into 16x P/S in a hot market (e. g.2021).

For Tesla, it is really about the future potential of the Robotaxi, Energy storage, and Optimus revenues. We could do a scenario analysis below

4. 2030 Scenario Analysis

Here is a quick scenario analysis of what Tesla could achieve by 2030, and its corresponding share prices in the bull, base, and bear scenarios. All of the assumptions are my subjective opinions. You are welcome to challenge them and use your own.

Revenue Breakdown & Assumptions (2030)

2030 Profitability Metrics

2030 Valuation Multiple, Market Cap Potential

Today’s Market Cap is $986B.

Share Price Projection for 2030, assuming a constant 3.22 billion shares outstanding

Bull Case: Significant execution across all business units results in a stock price of approximately $2100 per share by 2030.

Base Case: Execution aligned with current strategic targets yields approximately $1100 per share.

Bear Case: Lower-than-anticipated growth, reflecting execution challenges or macroeconomic headwinds, results in $440 per share.

If Musk fails to execute the base case scenario by 2030, given TSLA’s volatility, growing the market cap by just 7% annually is unlikely acceptable to shareholders.

5. Technical analysis

Tesla’s past earnings reactions

Tesla’s earnings reactions are largely arbitrary (just like other stocks), although since 2023, the selloff days have been around 10%.

At the time of writing (11am ET), TSLA is down almost 9%. This appears within the range of the past.

TSLA Daily (https://www.tradingview.com/x/Jrb9FNvp/)

While today’s drop appears large, TSLA suffered a 14% drop on June 5, and a 7% decline on July 7, both of which had subsequently seen recoveries. Today will likely close above the July 7 lows.

Overall, today’s movement does not fundamentally change the technical picture for Tesla.

TSLA is stuck between the upward channel’s lower bound and a trend line resistance overhead, awaiting a clean breakout either way.

TSLA Weekly (https://www.tradingview.com/x/NKGTQGfx/)

On the larger degree chart, TSLA is in a primary wave 5 (circle-5), that is subdivided in an ending diagonal pattern.

In an ending diagonal, each of the 5 waves consists of 3 sub waves (A-B-C). TSLA is likely inside the wave A of (5) towards the mid-$400s area currently.