To The Moon

$Tesla Motors(TSLA)$

Tesla Inc. is set to release its second-quarter earnings after the market closes on July 23, 2025, and investors are grappling with a familiar question: Is now the right time to buy Tesla stock — before earnings, after earnings, or perhaps not at all?

This quarter’s results come at a critical juncture for the electric vehicle (EV) pioneer, which is navigating slowing demand, competitive headwinds, and strategic pivots toward autonomy, energy storage, and artificial intelligence. Over the past year, Tesla’s narrative has shifted from relentless growth to painful contraction, forcing investors to reassess what they’re really buying: a car company, a technology leader, or a dream of a self-driving future.

In this article, we’ll explore what investors can expect from Tesla’s upcoming earnings, review the company’s reported production and energy storage data, assess its financial and strategic position, and revisit the all-important question of valuation. Most importantly, I’ll explain why — despite Tesla’s lofty ambitions — I don’t believe this is the right time to buy into the stock.

From “Sell” to “Hold”: Where Tesla Stands Today

At the outset of 2025, I rated Tesla stock a sell, citing its stretched valuation, mounting operational challenges, and overdependence on speculative growth in autonomy and AI. When the stock plummeted more than 40% early in the year, I revised my stance to hold, given the lower valuation and signs of progress in areas like robo-taxi testing in Texas.

Since then, however, little has changed in the fundamentals to warrant a more bullish position. Although the stock is trading well below its 2024 highs, it still carries a valuation that remains difficult to justify, even with aggressive assumptions about future growth. As we head into earnings, investors should approach Tesla with caution — and clear eyes.

Production and Delivery: A Decline in the Core Business

Tesla has already disclosed key operational metrics for Q2. The company delivered 384,122 vehicles in the second quarter of 2025, compared to 444,000 vehicles in Q2 of 2024 — a year-over-year decline of approximately 14%, marking the second consecutive quarter of delivery declines.

This slump comes despite Elon Musk’s prior assurances to investors that Tesla would grow deliveries by 20–30% in 2025. That forecast now looks increasingly unrealistic. The company’s strategy of repeated price cuts has failed to generate the hoped-for demand rebound, instead compressing margins and signaling waning pricing power.

Energy Storage: A Bright Spot, But Dimming

In its energy segment, Tesla deployed 9.6 gigawatt-hours of energy storage in Q2, up slightly from 9.4 GWh a year earlier — a modest 2% year-over-year increase. While still positive, the energy business shows signs of slowing momentum compared to earlier periods of explosive growth.

Energy has been a crucial offset to weakness in the automotive business: in Q1 2025, energy revenue rose 67% year-over-year, cushioning the impact of falling car sales. But with deployment growth decelerating and tariffs on China-sourced components weighing on margins, the energy segment may no longer be able to meaningfully counterbalance the automotive slowdown in future quarters.

Financial Expectations: Revenues and Margins Under Pressure

Tesla’s Q1 2025 results were sobering: total revenues fell 9%, with automotive revenues plunging 20%. For Q2, I expect automotive revenues to decline between 20% and 25% year-over-year, reflecting similar delivery declines compounded by lower average selling prices due to continued discounting.

The company’s operating margin has been in freefall, dropping from 10.8% in Q3 2024 to 6.2% in Q4, and then to just 2.1% in Q1 2025. While Q2 is typically a seasonally stronger quarter, a further margin contraction below 2.1% would be a major red flag.

Tesla’s vertically integrated business model magnifies this risk: as revenues shrink, margins and profitability tend to deteriorate at an even faster pace. This dynamic worked in Tesla’s favor during its pandemic-era boom, but now it’s working against it.

The Profitability Problem — and Its Implications

Perhaps most worrying is Tesla’s collapsing profitability. In Q1 2025, net income dropped by a staggering 71%. That raises a critical question: can Tesla continue to fund its ambitious investments in AI, autonomy, and robotics if its core business keeps bleeding cash?

Capital expenditures — which include investments in AI infrastructure, data centers, GPU purchases, and robo-taxi development — fell 46% year-over-year in Q1, to just $1.5 billion. If declining vehicle sales and shrinking profits continue to erode cash flow, Tesla’s ability to fund next-generation technologies could be severely impaired.

While Tesla boasts a strong balance sheet, with $37 billion in cash, that cash cushion is finite. If internal cash generation remains weak, the company may eventually be forced to raise additional capital — likely through share dilution — to sustain its innovation pipeline.

Valuation Remains Stretched

Given all these headwinds, one might expect Tesla stock to trade at a reasonable multiple by now. Instead, it remains one of the most richly valued large-cap stocks in the market.

At a forward price-to-earnings (P/E) ratio of 161, Tesla is priced like a high-growth software company, not an automaker grappling with declining sales and falling margins. Such a lofty valuation is typically reserved for businesses with accelerating revenues, expanding margins, dominant competitive positions, and long runways for profitable growth — none of which Tesla currently exhibits.

In my view, this valuation reflects not current reality but the company’s masterful ability to sell a vision of a fully autonomous, AI-driven, robotic future. While that vision may someday materialize, it is already more than fully priced into the stock — if not overpriced.

The Future of Autonomy: Still “Next Year”

For nearly a decade, Tesla has promised investors that fully driverless vehicles are just around the corner. Yet each year, that goal has remained out of reach. The development of autonomous driving and robotics continues to be delayed, while competitive threats from traditional automakers and new entrants intensify.

Even my own updated projections — which assume an almost 20x increase in free cash flow over the next 10 years, driven by eventual success in autonomy and AI — yield an intrinsic value of roughly $87 per share. That’s well below Tesla’s current market price of around $316 per share, implying that investors are paying for a level of growth and execution that remains speculative at best.

Strategic Risks Beyond the Numbers

Tesla also faces brand and reputational risks that are harder to quantify. The polarizing behavior of CEO Elon Musk, combined with political and social controversies, has alienated segments of Tesla’s customer base.

Meanwhile, regulatory headwinds loom: EV tax credits in the U.S. are being rolled back, while tariffs on Chinese-sourced components — particularly in the energy segment — are weighing on margins and could dampen growth. Tesla’s own comments acknowledge that tariffs are having a disproportionately negative impact on its energy business compared to automotive.

These factors only reinforce the view that Tesla is unlikely to deliver the kind of sustained, profitable growth that its current valuation implies.

Should You Buy Tesla Before Earnings? My Answer

So, back to the original question: should you buy Tesla stock before earnings?

In my opinion, the answer is no.

I do not recommend buying Tesla at its current valuation — before or after earnings — unless the stock price drops significantly. Even then, investors should weigh the speculative nature of its growth story against the tangible evidence of declining fundamentals.

Could the stock rise after earnings anyway? Absolutely. Tesla has repeatedly demonstrated that hype and narrative can drive short-term price gains, even in the absence of improving business metrics. Elon Musk could make a dramatic new forecast, unveil a roadmap for a future product, or otherwise reignite investor enthusiasm.

But any post-earnings rally would likely be based on sentiment rather than substance. The company’s revenues, earnings, and cash flow are unlikely to show meaningful improvement in the current or next few quarters.

Key Takeaways for Investors

Tesla remains one of the most fascinating — and polarizing — companies in the market. But investing in it at today’s valuation comes with substantial risk.

✅ The company has made progress in autonomy testing and energy storage, but both segments are slowing and remain a small portion of the business.

✅ Tesla maintains a strong balance sheet, which provides flexibility in the short term.

✅ The long-term vision of autonomy and AI remains compelling — but speculative.

⚠️ Vehicle sales are declining, with little evidence of a near-term turnaround.

⚠️ Margins and profitability are deteriorating, which could starve future investments.

⚠️ Valuation remains extremely high, leaving little room for error.

⚠️ Regulatory, competitive, and reputational risks are growing.

At the end of the day, investors must ask themselves: am I buying a car company, a technology company, or a story? At this price, the story appears overbought.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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