'It's not that bad': what's being said on Wall Street ahead of Tesla's quarterly report

Wall Street analysts believe that in the second quarter of 2025, Tesla faces a drop in revenue and profits due to lower sales of electric cars. However, investors are waiting not so much for financial results as for Ilon Musk's comments on the company's plans: a low-cost electric car, deliveries, a robotaxi project and the impact of Trump's law, which eliminates subsidies and tax breaks for buyers. Analysts differ in their assessments: some expect downward revisions to forecasts, while others are betting on Tesla's long-term potential in autonomous transportation and AI.

Tesla will release its second quarter 2025 financial results after the close of trading on Wednesday, July 23. The consensus estimate among analysts is for Tesla's quarterly earnings per share to fall 25% year-over-year to $0.39 and revenue to fall about 13% to $22.19 billion, reports Investor's Business Daily, citing FactSet data. At the same time, the consensus among analysts, who recently revised their forecasts, suggests that actual revenue could be lower than $22 billion, the publication specifies. Such a drop is due to a decline in deliveries: Tesla sold about 384,000 cars in the quarter - 13.5% less than in the same period a year earlier.

Investors aren't counting on record revenue or earnings, and the focus will be on Ilon Musk's statements during the conference call - especially on Tesla's low-cost model, plans for deliveries for the rest of the year and the direction of robotaxis, IBD notes. Market participants will also await his comments on Donald Trump's "big and beautiful" law that eliminated tax credits for electric vehicles and zero-emissions programs. Tesla makes billions of dollars by selling environmental credits to other automakers that fail to meet emissions and fuel efficiency requirements.

- "The backdrop before the release of this report is very different from what it was [before the previous report] three months ago," said Wedbush analyst Dan Ives, who is known for being bullish on Tesla. He believes that the elimination of tax breaks for electric cars under Trump's initiative will be a major setback for both Tesla and its competitors. Ives expects the company's management to address the topic during the conference call. He also predicts a rebound in deliveries in the second half of the year, especially thanks to the revamped Model Y in the Chinese market. Nevertheless, he said investors' main focus will be on Tesla's artificial intelligence projects, including an investment in Ilon Musk's xAI startup.

- Baird analyst Ben Kallo holds a "cautious" stance ahead of the report. In his estimation, Tesla could lower its full-year earnings forecast due to a delay in the release of a low-cost electric car model (expected to premiere in the first half of 2025), as well as the elimination of the tax deduction for electric car purchases under Trump's new law. Both of these factors, according to Kallo, can further reduce Tesla's sales. He maintains a "hold" recommendation on the securities and set the target price at $320, which implies a 2.5% drop in the company's quotes from the close on July 21.

- Bank of America on Monday raised its target price on Tesla shares to $341 from $305, up 4 percent from the close on July 21. Analysts said quarterly results are likely to come under pressure due to duties and weak shipments. However, they saw hope in the launch of a so far limited robotaxi service in Austin, Texas. They said it boosts confidence that Tesla can fulfill its promise to launch robotaxis by the end of 2025.

- Piper Sandler analyst Alex Potter took a more optimistic stance. "It's not as bad as it looks," he said regarding the elimination of subsidies. - "Tesla got about $3.5 billion in 'free money' last year in the form of such subsidies - that's about 100% of free cash flow for 2024." Potter added that the question about the impact of eliminating government subsidies on earnings is legitimate, but he estimates that Tesla will still be able to get about $3 billion in subsidies in 2025 and $2.3 billion in 2026. These figures are slightly lower than previously expected, but there is no reason to revise the forecasts, the analyst believes.

- RBC analyst Tom Narayan maintained a "buy" recommendation with a $319 target price. He still expects Tesla to still release a low-cost model, which will support sales in the second half of the year. The analyst also expects Tesla to tell investors about the advancement of its robotaxi project and plans for humanoid robots with AI, which should support the company's growth.  

- Barclays thinks that Tesla shares could show gains after its second-quarter report despite weak fundamentals. Investors, analysts say, are focused on the company's long-term prospects for robot cabs, and Musk may name fleet targets. That said, Barclays warns of shrinking margins and a 10% drop in sales in 2025. The delayed launch of the low-cost model, according to the analyst, may cause a negative market reaction. Nevertheless, the launch of robotaxis so far is capable of overriding this negativity.

- Andres Sheppard, an analyst at Cantor Fitzgerald, also remains positive. He recalled that Musk has previously hinted that the duties are more likely to hit the company's energy business than its automobile production. Therefore, Sheppard expects Tesla to lower its growth forecast for its energy storage business in the current report, but the analyst himself recommends a "buy" on the stock with a target price of $355.

This article was AI-translated and verified by a human editor