Tesla stock price has wavered in the past few weeks and is hovering near its all-time high as investors focus on the upcoming financial results. TSLA traded at $450 on Friday, down from its all-time high of $500. It remains 110% above the lowest level in 2025. So, what’s next for the stock ahead of the earnings?
Tesla Stock Price Braces for Earnings
The TESLA stock has remained in a tight range over the past few weeks as traders await upcoming earnings. Wall Street analysts expect the company’s revenue to drop 3.7% in the fourth quarter to $24.7 billion.
If this estimate is accurate, then it means that the annual revenue will come in at $94 billion, down by 3.10% YoY. This revenue slowdown will be due to falling sales after the end of the Federal tax credit for electric vehicles.
On the positive side, Wall Street believes that the company’s business will return to growth this year, helped by more vehicle brand launches and its autonomous vehicle strategy. Also, customers will likely embrace the new normal of the EV tax credit’s absence.
The average estimate is that its annual revenue will reach $107 billion this year, up 13% YoY, while its earnings per share will move to $2.17.
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Tesla is Facing Major Challenges
Still, Tesla is facing more challenges than opportunities in the future. First, Canada recently reached a deal with China, allowing Chinese EVs shipped to the country to pay a 6% tariff. This means Tesla will face more competition, as Chinese companies are known for making competitive vehicles at much lower cost.
Second, the same has happened in Europe, where countries reduced tariffs for Chinese EVs, a move that will lead to more competition. Indeed, data shows that Tesla’s sales to some European countries have plummeted in the past few months. China, a key market, has become more competitive, with the Model 3 being outsold by the recently launched Xiaomi vehicle.
Additionally, Tesla’s valuation has become overstretched in the past few years. The company has a forward price-to-earnings (P/E) ratio of 274, well above the sector median of 17.
A company with such a metric should be firing on all cylinders in terms of revenue and profitability.
For example, NVIDIA has a forward PE ratio below 50 despite its strong market share in the semiconductor industry. The average revenue estimate for 2025 is $213 billion, up by 63% YoY, while the estimate for this year is $313 billion, up by 51%.
Additionally, Tesla is betting on the artificial intelligence (AI) and robotics industry, including its robotaxi business. The challenge is that the business is highly competitive, especially from Waymo. It is also an unproven business.
TSLA Stock Price Technical Analysis
The three-day chart shows that the TSLA stock price has remained in a narrow range over the past few months. A closer look shows it has formed an ascending channel and a bullish engulfing pattern, consisting of a large bullish candle that covers a smaller red candle. These patterns point to more upside after its earnings.
The stock has formed a diamond reversal pattern, which often leads to a bearish breakdown. Also, it has formed an island reversal.
Therefore, the most likely scenario is that the stock rises after earnings, then resumes its downtrend. It may rise to the key resistance level at $487 and then resume the downtrend, potentially to the support level at $382, its lowest level on November 12.
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