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The significant majority of Tesla’s current revenue comes from automotive sales, complemented by revenue from energy storage and services.

However, Elon Musk has framed Tesla’s strategic evolution as a shift “from a hardware-centric business to a physical AI company”.

The identity shift means the longer-term earnings mix contains both AI/software and fleet-based profits, as well as hardware-related profits. They include FSD subscriptions, Robotaxi, and Optimus revenue in addition to the existing revenue streams.

This is the core thesis behind Tesla’s high valuation relative to other car companies such as GM and Ford.

There are primary revenue streams for Tesla:

In terms of the 2025 revenue mix, the split is 73% Automotive, 13% Energy, and 13% Services/Other.

TSLA’s Q4 revenue saw a 3.1% YoY decline to $24.9 billion, on the back of both lower deliveries and regulatory credits. There was a demand pull from Q4 into Q3 due to the IRS credit cliff, which affected Q4. Tariffs negatively impacted the energy segment (Tesla's Shanghai Gigafactory produces the Megapack).

Meanwhile, Active FSD subscriptions reached 1.1 million in Q4 2025, up 38% YoY. Tesla is now shifting its FSD monetisation strategy from an upfront fee to monthly subscriptions.

Regarding the Robotaxi rollout, Tesla began testing driverless Robotaxis in Austin in December and, in January, began removing the safety monitor from customer rides on a limited basis. Currently, the Bay Area ride-hailing service is operating with a safety driver. For 1H 2026, Tesla plans to expand into Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas.

On the production front, Cybercab is on schedule to begin volume production in April 2026. Tesla Semi is also on schedule for volume production this year. At the same time, Tesla expects to wind down Model S/X production and convert the Fremont S/X space into an Optimus factory.

Tesla plans to unveil the Gen 3 Optimus in Q1 2026, marking the first mass-production-oriented design.

Finally, Tesla expects greater energy deployments this year with the launch of Megapack 3 and Megablock. Their production is planned at Megafactory Houston this year.

Tesla’s revenue growth has not returned to the highs of 2021-2022 for ten consecutive quarters. This naturally makes institutional investors dizzy when assessing valuation versus growth.

In terms of the trailing twelve-month revenue, TSLA’s growth has been largely flat in the past two years.

Gross margin improved substantially in the quarter, by over 200bp from Q3 and 380bp from a year ago. The Automotive gross margin reached 20.4% in Q4 (or 17.9% ex-credits).

However, the EBITDA margin has declined year over year and in Q3 due to increased stock-based compensation, restructuring, and fixed production costs. There was increased R&D spending on FSD, Robotaxi, Optimus, and AI chip development.

TSLA’s earnings per share have declined for straight quarters on a year-over-year basis.

Tesla’s free cash flow declined from Q3 (which was the highest quarter ever). I’m not surprised by this, given the quarter's revenue decline, higher operating expenses, and higher CapEx.

Tesla guided to CapEx of $20+ billion in 2026, tied to six factories/lines (refinery, LFP factories, Cybercab, Semi, a new Megafactory, and an Optimus factory), plus AI compute infrastructure and expansions to existing factories. This is more than twice the 2025 level.

Tesla’s stock-based compensation increased in the latest quarter. There was a rise in SBC for engineering and AI roles, but Tesla also began recognising expenses related to its 2025 CEO Performance Award.

Tesla has produced over 8 million cars to date, and the 10 million FSD subscription milestone could be the lowest-hanging fruit for Musk to clear first.

Here are the key financial metrics from the past four quarters. I designed the table this way so we can focus solely on the key top-line, profit, and cash flow metrics.

Here are Wall Street's forward estimates. WS expects Tesla’s revenue to grow 19% in Q1, then level off, with NTM growth at 9%. This is better than 2025, but not a blowout either.

As TSLA's share price nears its all-time high, its profit multiples are at their highest in 3 years. Valuations of all metrics now sit at 2 standard deviations above the 3-year median.

At these levels, Tesla’s share price is vulnerable to a big pullback.

Tesla’s P/E has more than doubled since the beginning of 2025, from 143x to 385x. The NTM forward PE is also elevated at 249x.

Investors today are effectively betting on Tesla's dominant position in the global robotaxi sector.

If the global robotaxi market reaches $4 trillion as Ark Invest predicts and Tesla captures 25% of it, it could bring in $1 trillion with a 30% EBITDA margin - i.e. $300 billion.

Tesla could trade at 20x EV/EBITDA, i.e., a $6 trillion Enterprise Value, which is nearly a 5x multiple from here in half a decade.

By the way, I am not making this up - Elon’s compensation plan literally has $6 trillion and $300 billion EBITDA scripted as the 9th milestone.

TSLA is a highly volatile stock, and its Q1 performances in both 2024 and 2025 were very poor. To start the year, TSLA is already down 7.4%.

Tesla’s stock price tends to perform much better after week 13.

Tesla is no stranger to regular drawdowns. As recently as 2022-23, it fell 74% at one point.

Shareholders must be able to stomach this severe drawdown to ride through the long-term autonomous vision.

Tesla is most volatile in April and November.

Tesla shows the greatest correlations to SPY and HYG (high-yield credit). Recently, it has traded in a positive correlation with TLT (long-end bonds).

Tesla performs best after dropping by more than 10% in a day. Its one-month and three-month forward returns are 17% and 44%, respectively.

However, this has not occurred recently for us to monitor in real time.

Separately, Tesla tends to perform well after 7 consecutive down days, i.e., after falling 7 days in a row.

On average, it has returned 60% after one month, based on a small sample of 3 prior cases.

This 7-down-streak scenario was triggered after the New Year, and Tesla has been flat so far. Perhaps we can still see some fireworks next?

(https://www.tradingview.com/x/DYcGxfrK/)

TSLA traded flat post-earnings, but the broader market selloff also took TSLA down. It is now tapping outside the rising support line and leaving the high-volume profile zone.

⚠️ The risk of a near-term top is now high. I am becoming cautious.

The next potential support is at the 200-day moving average at $375, followed by the next high-volume profile zone at $350.

As TSLA trades near its all-time high and a multi-year high in valuation, I am becoming cautious about another large drawdown, which has repeatedly occurred in Tesla’s history.

If the price can reverse upward immediately from here today, we could still see one more high at $540. However, the odds are quickly shifting against it.