Tesla (TSLA) investors are no strangers to volatility. Over the past few years, they’ve navigated CEO Elon Musk’s headline-grabbing social media posts, production ramp-ups, ambitious promises, and groundbreaking innovation. But as the electric vehicle pioneer prepares to release its closely watched first-quarter earnings report on April 22, the stakes appear even higher than usual. Tesla stock has faced significant headwinds this year, dropping sharply due to concerns over declining delivery numbers, fierce competition from Chinese rivals like BYD (BYDDY), and ongoing uncertainty linked to Musk’s controversial political moves.

Should investors buy the dip in Tesla stock, betting on a comeback after earnings? Or would a cautious approach be more prudent, waiting for more clarity once the company announces its quarterly results? 

This article will dive deeply into Tesla’s current landscape, examining delivery trends, competitive pressures, growth catalysts, and valuation, to help investors make an informed decision before the April 22 earnings release.

About Tesla Stock

Valued at a market cap of $776 billion, Tesla (TSLA) is a prominent innovator dedicated to accelerating the global transition to sustainable energy. The Musk-led powerhouse designs, develops, manufactures, leases, and sells high-performance fully electric vehicles, solar energy generation systems, and energy storage products. It also offers maintenance, installation, operation, charging, insurance, financial, and various other services related to its products. In addition, the company is increasingly focusing on products and services centered around AI, robotics, and automation.

Shares of the EV maker have been under heavy pressure this year, sliding 40.4% year-to-date and ranking among the worst performers in the S&P 500 Index ($SPX). Major factors contributing to this weak performance include falling EV sales and the controversial political activities of CEO Elon Musk.

Despite a significant YTD drop, Tesla’s valuation still appears quite high. The stock is currently trading at a forward non-GAAP price-earnings (P/E) multiple of 116.6x, which is well above the sector median of 13.53x, leaving investors with minimal margin of safety.

Disappointing Q1 Deliveries Put Pressure on Tesla

Tesla’s latest Q1 delivery numbers present a strikingly grim view of its current performance and raise questions about its short-term prospects. The company delivered just 336,681 electric vehicles in the first quarter, a 13% decline from the previous year. It’s also worth noting that the decline occurred against a relatively weak base in Q1 2024, during which Tesla also experienced a year-over-year drop. Not only did Tesla’s delivery numbers significantly decline year-over-year, but they also fell well below what Wall Street analysts had predicted. The consensus estimate was 377,000 vehicles, yet Tesla fell short by approximately 40,000 vehicles, missing the mark by more than 10%. Overall, its Q1 deliveries marked the lowest quarterly total since 2022.

With that, the latest figures indicate that the company is grappling with significant headwinds. Deliveries were affected by a combination of consumers distancing themselves from Tesla for political reasons and adjustments to production requirements for the new Tesla Model Y. Notably, in March 2025, Tesla introduced a simplified version of its best-selling Model Y to provide a more affordable EV option for price-sensitive buyers.

At the same time, while Tesla has been facing challenges, Chinese EV manufacturers, on the other hand, have been demonstrating relatively strong growth metrics. For instance, BYD reported sales of 416,388 battery-electric vehicles (BEVs) in Q1, a remarkable increase of 38.7% compared to the same period last year. This performance cemented its status as the world’s leading electric vehicle seller for the second consecutive quarter. As I noted in my late March article on Tesla, BYD has emerged as Tesla’s most significant competitor in China, the world’s largest EV market and the second-largest market for Tesla after the U.S.

Another key figure released alongside the delivery numbers was the company’s deployment of 10.4 GWh of energy storage products, representing a 156% year-over-year increase. I am a big fan of Tesla’s energy business and view it as a solid long-term opportunity for the company to diversify its operations. However, I was disappointed to see a sequential slowdown from the 11 GWh reported in Q4 2024.

Unsurprisingly, Wall Street analysts expressed disappointment with the company’s delivery figures. For example, Dan Ives from Wedbush Securities described Tesla’s performance as a “disaster across nearly every metric,” indicating that Musk must refocus and make Tesla a top priority in light of its current challenges. Separately, Barclays pointed out that the weak Q1 figures pose a significant challenge for the future of the EV giant.

All Eyes on Tesla’s Q1 Results

Investor attention is currently centered on Tesla’s first-quarter earnings report, which the company is scheduled to release on April 22 after the market close. And expectations are low going into the release. 

Tesla’s underwhelming Q1 delivery figures have alerted investors to brace for another challenging revenue quarter. Notably, the company missed eight of its last 12 revenue estimates and six of its last 12 earnings estimates, an unusually high rate of misses for any company. With that, given the declining volumes, increasing competition in the EV market, and ongoing pricing pressures, this earnings report could highlight another challenging period for the company.

Meanwhile, investors will be keen to see how vehicle pricing strategies, contributions from the energy and services business, and cost-control efforts have impacted the bottom line. Tesla has been actively working to lower its average cost of goods sold per vehicle, bringing it down to under $35,000 between Q1 2023 and Q4 2024. Investors will be looking for further cost improvements, as they bolster profitability and provide the company with more flexibility for price cuts, a strategy Tesla has used to compete with Chinese rivals. Nevertheless, discounts and incentives likely put pressure on the company’s Q1 gross margins. Overall, the automotive segment is expected to remain weak.

Another important area to monitor is the company’s energy business, which, while currently the smallest, is its fastest-growing revenue segment. This segment generated 10% of the company’s total revenue in 2024, amounting to $10.1 billion. The company is expected to see continued growth in this segment in Q1, driven by strong demand for its Megapack and Powerwall products.

Investors will also closely monitor both near-term and long-term growth catalysts for the company. In 2025, Tesla aims to introduce a more affordable vehicle model and begin testing its Robotaxi services in select markets. Notably, Robotaxi service relies on Tesla’s Full Self-Driving (FSD) technology, which has the potential to generate high-margin, recurring revenue through subscriptions, licensing, and the eventual rollout of the Robotaxi service. With that, investors are eagerly anticipating updates on these initiatives. In addition, investors will be keen to hear more from CEO Elon Musk on robotics. The company is making significant investments in this field and developing Optimus, described by Musk as the “biggest product in history” with the potential to generate over $10 trillion in revenue over the long term.

When it comes to tariff risk, Tesla’s operational structure largely shields it from the latest U.S. tariffs on vehicle and auto parts imports due to its extensive local manufacturing. However, the company faces exposure to tariffs within its supply chain and on specific models.

According to Wall Street estimates, TSLA is expected to post a 4.25% year-over-year drop in adjusted EPS to $0.43 in Q1. Moreover, analysts forecast the company’s first-quarter top line to grow just 1.12% from the previous year to $21.54 billion. 

Options Market Sentiment on Tesla Stock

Looking at the option chain for Apr. 25, 2025 (first after the earnings report), the $242.50 CALL option shows a bid/ask spread of $11.50/$11.60, and the $242.50 PUT option has a spread of $17.10/$17.25. Keep in mind that this option strike is the closest to the current stock price. We can now calculate the expected price movement by using the midpoint prices of these options:

17.18 (242.50 put) + 11.55 (242.50 call) = 28.73/241.55 = 11.9%

Based on current prices and employing the long straddle strategy, the options market indicates that TSLA stock could experience a movement of about 12% by next week’s options expiration from the $242.50 strike price. That would place the stock in a trading range of $212.8 to $270.3.

Notably, at the $242.50 strike price, open put options outnumber open call options by about 3.2 to 1, with 921 open puts versus 288 open calls. This indicates a bearish sentiment in the options market, suggesting that traders are anticipating further declines in the stock.

What Do Analysts Expect for TSLA Stock?

The Wall Street community is split on Tesla, with the stock currently holding a consensus rating of “Hold.” Out of the 41 analysts covering the stock, 16 rate it a “Strong Buy,” three recommend a “Moderate Buy,” 12 advise holding, and 10 give it a “Strong Sell” rating. The mean target price for TSLA stock stands at $306.22, suggesting a potential upside of 27.5% from current levels.

The Bottom Line on TSLA Stock

Considering that the upcoming earnings report is likely to reveal flat or negative performance, I don’t believe investors should rush to buy TSLA stock. Of course, Tesla could achieve long-term growth from its anticipated cheaper car model, Robotaxi, and Optimus initiatives, but for now, jumping into TSLA stock seems too risky to me. The bearish sentiment in the options market, combined with Tesla’s high valuation, supports my cautious outlook.

On the date of publication, Oleksandr Pylypenko 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. For more information please view the Barchart Disclosure Policy here.