Going Into Earnings, Is Tesla Stock a Buy, a Sell, or Fairly Valued?

Tesla is set to release its second-quarter 2026 earnings report on July 22. Here’s Morningstar’s take on what to look for in Tesla’s earnings and the outlook for its stock.Key Morningstar Metrics for TeslaFair Value Estimate : $450.00Morningstar Rating : NarrowMorningstar Uncertainty Rating Historically, Tesla has used credit lines, convertible debt financing, and equity offerings to raise capital. We think the company would have no problem raising debt if needed to fund its robotaxi and humanoid robot growth plans.Read more about Tesla’s financial strength.Risk and UncertaintyWe assign Tesla a Very High Uncertainty Rating, as we see a wide range of potential outcomes for the company. The automotive market is highly cyclical and subject to sharp demand declines based on economic conditions. Tesla is subject to growing competition as lower-priced EVs enter the market. Tesla has cut prices and offered lower-cost versions of its Model 3 and Model Y vehicles, and further price cuts could reduce profits.The company is also investing heavily in R&D and capital expenditures to develop autonomous driving software, robotaxis, and humanoid robots, with no guarantee these investments will bear fruit. As of the last Securities and Exchange Commission filing, Tesla’s CEO owns roughly 13% of the company’s stock and uses it as collateral for personal loans, which raises the risk of a large sale to repay debt.Tesla faces environmental, social, and governance risks. The automaker is subject to potential product defects, including those in its autonomous driving software, that could result in recalls. We see a moderate impact should this occur.Tesla may also face regulatory issues in some US states due to laws that require automakers and dealers to be separate. We see a moderate probability but low materiality.Read more about Tesla’s risk and uncertainty.TSLA Bulls SayTesla could disrupt multiple industries with its technology for EVs, AVs, batteries, and humanoid robots.Tesla’s full self-driving software should generate growing profits in the coming years as the technology continues to improve, leading to a robotaxi service and increased adoption by Tesla drivers.Tesla’s humanoid robot will create shareholder value, as its ability to perform multiple functions will transform manufacturing and be useful to consumers.TSLA Bears SayTraditional automakers and new entrants are investing heavily in EV development, which will result in declining deliveries. This will force Tesla to cut prices due to increased competition, eroding profit margins.Tesla’s large investment in autonomous driving software will be value-destructive as the robotaxi product will face delays and competition from Waymo, which already offers a robotaxi service.CEO Elon Musk’s political activities will turn consumers away from buying a Tesla in key markets, including the United States and Europe, leading to lower sales and profits.This article was compiled by Irza Waraich.
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