As Tesla Launches an Updated Model Y, Should You Buy, Sell, or Hold TSLA Stock?
Electric vehicle (EV) industry powerhouse Tesla (TSLA) recently rolled out affordable versions of its Model Y SUV and Model 3 sedan. The vehicles have starting prices of $39,990 and $36,990, respectively. However, there are concerns that the models are not really all that cheap.
Facing rising competition in Europe and China and the loss of the federal EV tax credit, the new models represent a way for the company to stop sales from falling. Is this news an opportunity to buy TSLA stock?
Tesla’s main base is now in Austin, Texas, where Gigafactory Texas anchors both its corporate activity and manufacturing power. In 2025, Tesla has been ramping up efforts on EV production, battery innovation, and energy ventures, with major projects rolling out from this site.
New initiatives — such as robotaxi launches in Austin — are ongoing, signaling rapid expansion. Amid market ups and downs, Tesla remains at the forefront of the auto and clean-energy sectors. The company has a market capitalization of $1.45 trillion.
While TSLA stock is down from its highs, it has still held up well over the past year. Over the past 52 weeks, the stock has gained 96%. Shares had reached a 52-week high of $488.54 in December 2024, but Tesla is down 12% from this high. This year, TSLA has also been underperforming the broader market, with shares up 6% year-to-date (YTD) versus the S&P 500 Index’s ($SPX) 13% gains over the same period.
TSLA stock is trading at an eye-watering valuation. Its price sits at 357.23 times forward earnings, which is significantly higher than the industry average.
For the second quarter of fiscal 2025, Tesla’s automotive revenues dropped 16% year-over-year (YOY) to $16.66 billion, moderately beating Wall Street analysts’ estimate of $16.53 billion. Total revenues for the quarter declined 12% from the prior-year period to $22.5 billion, missing the $22.74 billion figure analysts were expecting. The decrease in Tesla’s topline was driven by a decline in vehicle deliveries and reduced average selling price of its vehicles.
Total production numbers for Q2 came in more or less flat YOY at 410,244. Meanwhile, total delivery numbers dropped 13% YOY to 384,122, while analysts were expecting 397,843 vehicles delivered. The drop in deliveries was predicated upon a 12% YOY drop in its Model 3/Y deliveries.
Tesla’s adjusted EBITDA also dropped by 7% from the prior-year period to $3.4 billion. Adjusted EPS came in at $0.40, down 23% YOY but more or less matching Wall Street analysts’ expectations.
However, Tesla has recorded better production and delivery figures for the third quarter. Its production figure was 447,450, while deliveries reached a record 497,099. The company also deployed 12.5 gigawatt-hours (GWh) of energy storage products. Tesla is set to report Q3 earnings on Oct. 22 after the market close.
Wall Street analysts are not optimistic about Tesla’s bottom-line growth trajectory ahead of the quarterly results. For Q3, analysts expect EPS to decline 34% YOY to $0.41. For the current year, EPS is projected to decline 43% annually to $1.16, followed by a 68% YOY improvement to $1.95 in fiscal 2026.
Wall Street analysts have a mixed view of Tesla’s prospects at the moment. Recently, Stifel raised the price target on TSLA stock from $440 to $483, while maintaining a bullish “Buy” rating. Analysts expressed optimism regarding Tesla’s full self-driving (FSD) technology and its expanding robotaxi network. Analysts at Canaccord Genuity also maintained a “Buy” rating on Tesla, as well as a $490 price target.
On the other hand, analysts at UBS are not that optimistic about the firm’s prospects. UBS analyst Joseph Spak reiterated a “Sell” rating on shares, while raising the price target from $215 to $247.
Wall Street analysts are taking a cautious stance on TSLA stock now, with a consensus “Hold” rating overall. Of the 42 analysts rating the stock, 13 analysts have a “Strong Buy” rating, two analysts have a “Moderate Buy” rating, 17 analysts play it safe with a “Hold” rating, and 10 analysts provide a “Strong Sell” rating. The consensus price target of $345 represents 20% potential downside from current levels. However, the Street-high price target of $600 indicates 40% potential upside from here.
Tesla’s financial growth has stalled, and it remains to be seen whether the firm’s new models can help it regain lost ground. However, the new vehicle models are already not considered cheap by some. Moreover, Tesla recently came under scrutiny from the National Highway Traffic Safety Administration (NHTSA), which has launched an investigation into its FSD technology. As the market watches every development surrounding Tesla, this might affect its stock price. Therefore, it may be wise to just observe TSLA stock for now.
On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com