Selling Tesla stock amid weak earnings report

The outlook for Tesla's shares suggests a potential decline due to several negative fundamental factors, some of which are outlined below.

The first reason is lower profits. In the third quarter (Q3) of 2025, the company's net profit dropped by 37% compared to the same period last year, despite revenue growth. This was driven by reduced margins, which, in turn, were the result of falling prices and rising costs. A 37% decline in profits alongside record revenues indicate that Tesla is earning less money on each vehicle sold.

Increased competition is another factor. Chinese manufacturers (such as BYD) and traditional automakers are actively taking over the market, reducing Tesla's share, especially in the US, where it has already plunged below 40%.

Elon Musk's eccentric public statements and political views may alienate some consumers, representing a serious political risk for the tech giant. The company's CEO is also betting big on Optimus robots and driverless technologies, but their business outlook remains unclear, putting the firm in an unstable position.

In addition, the last two earnings reports did not mention Tesla’s “unboxed” production system, which may raise questions among market participants.

Last but not least, the introduction of import duties exerts extra pressure on the company’s profitability due to uncertain prospects and rising costs of final products.

At the same time, there are some factors that could support Tesla’s stock growth. The first is increased revenues, which surged by 12% in Q3 compared to a year ago. Over the same period, record vehicle deliveries were recorded.

Moreover, some investors remain optimistic about Tesla's long-term prospects, betting on its innovative approach and current market share.

From a technical perspective, after the release of the Q3 report and the subsequent decline in share prices, Tesla's stock is likely to consolidate.

Analysts’ consensus forecast is neutral but points to a potential 9.5% drop over the next twelve months.

In the medium term, traders' expectations are negative. Weak Q3 financial results, increased competition, and political risks are forcing investors to be more cautious.

The overall recommendation is to sell Tesla’s shares. Profits should be taken at the level of $360.0. Stop Loss could be set at $460.0.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.