Tesla Stock Keeps Climbing Despite All Its Woes: Should You Buy or Sell TSLA Here?
Tesla (TSLA) is perhaps the most fascinating yet polarizing company of our times. Led by Elon Musk, who is among the most, if not the most, controversial business leaders, the stock has vocal armies of fans and haters.
While Tesla stock remains in the red for the year, it has rebounded sharply from its 2025 lows. However, the news flow hasn’t particularly been supportive of the upward price action. In this article, we’ll discuss some of the challenges that Tesla is facing and examine why the stock continues to rise despite the multiple challenges.
During Tesla’s Q2 2025 earnings call, Musk warned of a few “rough quarters” ahead. However, the company has already faced several of these “rough” quarters, and while Musk stressed that his prediction is only a possibility and not something certain, the company looks set to face a few more. Here are some of the challenges that Tesla faces.
-
Tesla’s Revenues Have Been Falling: The automotive business, which accounts for the bulk of Tesla’s revenues and profits, is in deep trouble with vehicle sales falling in the first half of the year. Things haven’t been pretty globally, and registration data shows a sorry state of affairs in China and Europe, where Tesla continues to lose ground. While the company’s U.S. sales might rebound in the current quarter as buyers expedite their purchases ahead of the expiration of the EV tax credit, a yearly rise in 2025 deliveries seems unlikely.
-
Ageing Fleet: Tesla’s portfolio is plagued by an aging fleet, and while the company has refreshed its best-selling Model Y, it hasn’t been able to come up with new models to complement its portfolio. The Cybertruck has been nothing short of a failure and we still don’t know much about the long-awaited low-cost platform.
-
Tesla’s Margins Might Dip Further: Tesla’s once-industry-leading margins have withered away amid the price war. To make things worse, the sales of regulatory credits, which almost entirely flowed to Tesla’s bottom line, are set to fall further as the One Big Beautiful Bill Act does away with penalties on automakers that do not meet emission standards.
As Tesla bulls and Musk would agree, the Tesla story isn’t just about electric cars or renewable energy, but about other businesses like autonomous driving, robotaxis, and robotics. There is little denying the argument, as Tesla does not command a $1 trillion valuation by virtue of being an automaker alone.
While Tesla cars are still not autonomous, the robotaxi rollout is progressing well. Tesla’s geofenced area in Austin, which is basically a digitally demarcated area where the robotaxis can operate, has expanded to 171 square miles, well ahead of Alphabet-backed Waymo (GOOG), which has been in operation for much longer.
Then we have the Optimus humanoid, which Musk believes could add trillions to Tesla’s market cap. Artificial intelligence (AI) products like humanoid robots could be the next big story in the AI pivot, and the market is expected to see tremendous growth as robots become more efficient.
That said, such bullish predictions were also made about electric cars, whose sales in the U.S. have been tepid at best. There is also the execution issue, as Tesla hasn’t been able to come up with an unqualified success story since Model Y. Competition from Chinese companies is another potent risk for Tesla’s robotics business.
While most companies tend to give conservative guidance and work on the principle of “under promise and overdeliver,” Tesla and Musk work on the contrary. The company makes bold predictions that it mostly fails to deliver on. These include a million robotaxis by 2020, selling 20 million EVs annually by 2030 (a target it officially withdrew), a 50% delivery CAGR over the long term, selling 250,000 Cybertrucks annually beginning in 2025, and last but definitely not least, reaching full autonomy by the “end of the year” that Musk has been promising for the last many years.
One of the reasons Tesla’s stock continues to soar is Musk’s ability to move the stock price higher with his social media posts and bullish comments. Shorting Tesla has been a risky exercise for bears, and many have burnt their fingers, which hampers efficient price discovery in the stock.
Overall, while I maintain a small position in Tesla, I am in the neutral camp. The company is a show-me story now and needs to justify its mammoth market cap more than ever.
On the date of publication, Mohit Oberoi had a position in: TSLA, GOOG. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com