Financial major JPMorgan remains downbeat about Elon Musk-led EV (and increasingly AI) company Tesla (TSLA). Citing risks surrounding increased competition, a decline in deliveries, questions around execution, and diminishing brand value, the Wall Street institution has reiterated its “Underweight” rating on the stock ahead of its Q1 earnings.
In a note to clients, the firm said, “We continue to see large -60% downside to our $145 December 2026 price target and advise investors to approach TSLA shares with a high degree of caution, mindful of execution risk and the time value of money within the context of the materially stronger distant out-year earnings expectations implied by the rise in TSLA share price that has occurred alongside a material collapse in consensus for all performance metrics through at least the end of the decade.”
Notably, the share price performance reflects that weakness, as TSLA stock is down about 23% on a year-to-date (YTD) basis.
What then to make of the stock now? Let’s find out.
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Tesla reported another quarter where it beat both revenue and earnings estimates, yet the broader results remained underwhelming.
In Q4 2025, total revenue declined 3% year-over-year (YoY) to $24.9 billion, with automotive revenue falling 11% to $17.7 billion. Earnings per share dropped 17% to $0.50, narrowly surpassing the $0.45 consensus estimate. This marked the fourth consecutive quarter of YoY EPS decline. Over the past nine quarters, Tesla has beaten earnings estimates only three times.
Gross margins narrowed to 5.7% from 6.2% in the prior-year quarter. Operating cash flow decreased 21% to $3.8 billion. The company closed the period with $44.1 billion in cash, ahead of short-term debt of $31.7 billion.
Both production and deliveries declined after a temporary lift from the expiration of federal EV tax credits. Production totaled 434,358 vehicles, down 5% YoY, while deliveries fell 16% to 418,227 units. This became even worse in Q1 2026 as the company reported production and deliveries of…
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