Tesla Stock Just Hit a New 2025 High. Should You Buy the Run-Up in TSLA or Stay Far Away?
Tesla (TSLA) has made a phenomenal turnaround this year as share prices have recovered from the early-year drastic lows and scaled new year-to-date (YTD) highs of more than $435. The turnaround had been prompted by excitement for the company’s new robotaxi service it unveiled for Austin, the foray into lower-cost EV markets, and the company’s larger plans for artificial intelligence (AI) and energy storage.
At the same time, Tesla’s surge comes against the backdrop of a challenging macro environment of shifting trade policies, rising tariffs, and uneven EV demand globally. While the broader S&P 500 Index ($SPX) has recovered solid ground this year, Tesla’s surge has been much steeper, leaving investors wondering if the pace can be maintained or if risk tied to valuation and execution could cause a pullback.
Tesla makes electric vehicles (EVs), self-driving software, and energy storage products. The company based in Austin, Texas, has emerged as the world’s leading automaker by value, as its market cap crossed $1.4 trillion. Beyond vehicles, Tesla is developing an ecosystem spanning robotics, AI training compute, solar power, and grid products from Megapack.
The shares have almost doubled during the past 52-week period, up from lows of $212 to a high of $488. This year so far, the stock of Tesla has increased by over 70%, compared with the S&P 500’s 17% gain. This outcome demonstrates renewed confidence by investors in Tesla’s tech strategy but also highlights significant expectations built into the current level.
The biggest question is valuation. Tesla also has a trailing price-earnings multiple of 250.6x and a forward multiple of 355.8x, well above car industry standards and even its growth-focused peers. Its price-to-sales multiple of 14.5 and price-to-cash flow multiple of 110 suggest Wall Street pays Tesla as if it were a high-margin tech platform and not a car company. Bulls argue the future robotaxi, AI, and energy revenues justify such levels, but bears warn the valuation does not leave much for execution risk.
It does not pay a dividend, like many large-cap peers, keeping capital for investing back into growth opportunities.
Second-quarter 2025 revenue arrived at $22.5 billion, down by 12% from the previous-year quarter as car deliveries declined by 13%. Automotive quarterly revenue dropped to $16.7 billion, thanks to reduced average sale prices and reduced regulatory credit sales. Energy generation and storage contributed $2.8 billion, but Services and Other rose by a staggering 17% to $3.0 billion.
GAAP net income was $1.17 billion, which generated diluted EPS of $0.33, a significant drop from $0.40 for the corresponding prior-year quarter. EPS on a non-GAAP basis for the quarter was $0.40, a 23% decline from the prior-year quarter. Operating margin tightened to 4.1% from 6.3% a year ago due to weaker deliveries, increased tariffs, and high AI and research and development spending. Free cash flow plunged to a mere $146 million from $1.34 billion a year ago.
The company carefully guided, remarking on skepticism around trade policies and tax adjustments but reaffirming its commitment to delivering a cheaper EV in 2H 2025 and scaling up the robotaxi “Cybercab” platform for 2026. Tesla highlighted the strong $36.8 billion cash level, which it counts as adequate for powering an aggressive roadmap through autonomy, energy storage, and robotics.
Recent highlights included the first self-driving delivery of customer cars in Austin, the first global rollout of Shanghai Megapacks, and record-breaking trailing-12-month deployments of energy. Supply of Tesla cars, however, rose to 24 days as a result of continued demand and supply imbalances.
Tesla has a “Hold” rating consensus with an average target of $315.19; this would imply a downside of roughly 28% from the current level of around $440. The ratings are highlighting Tesla’s long-term platform potential for self-driving and AI, and the bears are highlighting execution risk, competition, and extreme valuation. Since the stock already embodies transformative success, investors face a drastic asymmetry of upside optionality compared to downside risk if growth does not continue.
On the date of publication, Yiannis Zourmpanos had a position in: TSLA. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com