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Tesla: 3 Reasons October's Earnings Will Make or Break the Stock
Written by Sam Quirke. Published 9/23/2025.
Key Points
- Tesla shares are trading at their highest level in nearly a year after an eye-watering rally.
- However, their upcoming earnings report in October now looms as a decisive moment for the stock.
- The company’s valuation and bullish analyst expectations leave little margin for error.
Shares of Tesla Inc. (NASDAQ: TSLA) opened this week around the $430 mark, continuing a remarkable run that has seen them more than double in value since April. The stock sits at its highest level since December of last year, driven by renewed optimism around growth drivers such as autonomous driving and robotics.
But after such a rapid ascent, October's earnings report could not be more critical. Investors riding this rally will want to see clear confirmation that the fundamentals can support Tesla's current valuation.
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With the stock's price-to-earnings multiple now above 250—the loftiest in almost four years—the margin for error is razor-thin.
One thing is certain: it will be one of the quarter's most-watched reports. Here are three reasons why it could make or break Tesla's year.
Reason #1: Margin and Delivery Pressures
At the heart of Tesla's earnings story is whether it has stabilized profit margins and delivery volumes. As we recently flagged, the company's U.S. market share fell below 40% last month for the first time since 2017—a sharp reminder that Tesla is no longer the only game in town.
Competitors from home and abroad are encroaching on the EV market, while Tesla's lineup has aged and become less differentiated.
Price cuts in China and discounts in Europe and the U.S. have already squeezed margins, and brand challenges persist. Analysts will watch to see if cost efficiencies and the refreshed Model Y can offset these headwinds. With expectations already sky-high, even a minor miss could deflate the rally.
Reason #2: Valuation Demands Flawless Results
Then there's the question of valuation, where even the bulls must admit Tesla leaves little room for error. The stock now trades at more than 250 times earnings—far above the broader market and many of its tech peers.
Such a premium might be justified if growth continues to exceed expectations, but it puts enormous pressure on every quarterly update. October's report must show that revenue growth, margin trends, and demand pipelines remain robust enough to support this multiple.
If Tesla delivers, analysts will likely keep ratcheting up their forecasts. Last Friday, the team at Baird upgraded its rating on the stock from Hold to Strong Buy, and on Monday Piper Sandler boosted its price target to $500.
Still, some on Wall Street are urging caution: Goldman Sachs gave Tesla shares a Neutral rating last week. If the report comes in even slightly light, bears will argue that Tesla's multiple has outrun its fundamentals, and bullish analysts may be forced into an awkward retreat.
Reason #3: The Narrative Around New Growth Engines
Tesla's long-term bull case increasingly rests on opportunities beyond cars. Elon Musk has positioned the company as a leader in autonomy, robotics and AI-driven platforms. The launch of its robotaxi service in Austin earlier this year—though modest in scope—was framed as a step toward a driverless fleet.
Meanwhile, progress on Optimus, its humanoid "Tesla Bot", has been pitched as another transformative opportunity.
The problem for investors is that much of this narrative remains speculative. Full Self-Driving software is still awaiting full regulatory approval, and Optimus is years away from scaled production.
October's earnings call will be a key moment for management to update investors on the reality of these initiatives. If Tesla can show that its investments in autonomy and robotics are moving closer to revenue-generating businesses, bulls will have another powerful reason to stay long. If not, bears will argue that investors are still paying tech multiples for an automaker losing market share.
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