Tesla Inc. (NASDAQ: TSLA) is riding a wave of investor enthusiasm as CEO Elon Musk steps away from his public-sector commitments and redirects his focus to the company’s operations. Musk’s return comes just days before Tesla’s much-anticipated Robotaxi service is set to debut in Austin, Texas, on June 12. This news has pushed Tesla stock up 23% in May, dramatically outperforming the broader market and setting the stage for aggressive investor speculation.
Highlights:
Elon Musk exits his role at DOGE, refocuses on Tesla.
Robotaxi launch scheduled for June 12 in Austin.
TSLA surged 23% in May, beating Nasdaq’s 8% and S&P 500’s 5% gains.
Detachment From Fundamentals: Revenue Declines and Margin Pressures Persist
Despite the recent rally, Tesla’s core business fundamentals remain under pressure. The EV segment, Tesla’s main revenue driver, continues to decelerate amid increasing competition from U.S. players like Rivian and international brands like BYD. Moreover, Tesla reported a 7.34% year-on-year decline in quarterly revenue and a 17.31% drop in EPS, with annual earnings projected to fall by nearly 22%. This disconnect between the business outlook and stock performance raises concerns over sustainability.
Highlights:
Q1 revenue expected to decline 7.34% YoY; EPS down 17.31%.
Annual EPS forecast: $1.89, down 21.9% YoY.
Competition from Rivian, BYD intensifying pressure on EV sales.
Analyst Ratings Diverge as Valuations Hit Extreme Levels
Tesla’s stock is now trading at a Forward P/E of 181, a level rarely seen in the auto industry. The PEG ratio sits at 9.55, compared to the industry average of 1.07, underscoring the premium being assigned to Tesla on the back of optimism, not earnings. The Zacks Rank system has downgraded Tesla to #5 (Strong Sell) due to falling earnings estimates—down over 10% in the last month. This ranking reflects weak industry momentum and declining analyst confidence in near-term financial performance.
Highlights:
TSLA Forward P/E: 181.61 vs. industry average of 10.14.
PEG ratio: 9.55, signaling inflated growth expectations.
Zacks Rank: #5 (Strong Sell); estimate revisions down 10.14%.
Bullish Calls From Wood and Ives Add to Retail Frenzy
Despite concerns, notable Tesla bulls are doubling down. Cathie Wood of Ark Invest reaffirmed her long-term price target of $2,600, and Dan Ives of Wedbush upgraded his target to $500. They argue that Tesla is entering a new growth era, driven by autonomy and software. However, Musk himself has tempered expectations, noting that Robotaxi’s June debut will be modest and unlikely to meaningfully impact financials for at least another year.
Highlights:
Cathie Wood price target: $2,600; Dan Ives: $500.
Robotaxi seen as a long-term catalyst, not an immediate revenue driver.
Musk warns Robotaxi impact will be limited in 2025.
Technical Outperformance But Sector Weakness Persists
Tesla closed at $344.46, up 0.52% on the day, but still slightly underperforming the Nasdaq’s 0.81% gain. Over the last month, Tesla has gained 22.28%, compared to 10.94% for the Auto-Tires-Trucks sector and 4.61% for the S&P 500. However, the Automotive – Domestic sector ranks in the bottom 12% of all Zacks-tracked industries, signaling broader sectoral weakness.
Highlights:
Monthly performance: TSLA +22.28%, sector +10.94%, S&P 500 +4.61%.
Industry Rank: 218 out of 250+ (bottom 12%).
Market outperforming, but sector-level caution remains.
