Tesla (TSLA) Stock Forecast & Price Target

Tesla's Service & Other revenue reached $3.37 billion, reflecting an 18% year-over-year growth, aided by the addition of over 3,800 new Supercharging stalls and robust demand for its updated vehicle fleet. Despite facing a challenging demand backdrop, the company demonstrated improved margin quality, with auto gross margins excluding credits at 17.9%, significantly surpassing expectations and indicating effective cost management and pricing power. Additionally, the strong growth in Full Self-Driving active subscription counts, which reached 1.1 million, alongside plans to expand its Robotaxi service and advancements in AI chip development, highlight Tesla's commitment to innovation and expansion in the autonomous vehicle space.

Tesla's recent operating income of $1.41 billion represents a decline over prior periods and marks the sixth year-over-year decrease in the last eight quarters, primarily attributed to rising operating expenses and lower regulatory credit revenue. Total Automotive revenue fell to $17.69 billion, a 10% year-over-year decline and slightly below expectations, while overall revenue also saw a reduction to $24.90 billion, down 3% year-over-year, raising concerns about margins amidst decreasing vehicle deliveries. The anticipated introduction of next-generation vehicles adds uncertainty to Tesla's margin trajectory, compounded by external macroeconomic pressures and competition, which could continue to negatively impact the company’s automotive units and average selling prices.