Buy, Sell or Hold TSLA Stock? Key Tips Ahead of Q4 Earnings

Tesla TSLA is slated to release fourth-quarter 2025 results on Jan. 28, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 44 cents per share and $25 billion, respectively.

The earnings estimate for the to-be-reported quarter has been revised downward by 3 cents over the past 30 days. The bottom-line projection indicates a year-over-year decline of 40%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year contraction of 3%.

For full-year 2025, the Zacks Consensus Estimate for TSLA’s revenues is pegged at $95 billion, implying a decline of 3% year over year. The consensus mark for 2025 EPS is pegged at $1.61, suggesting a drop of around 33% on a year-over-year basis.

In the trailing four quarters, this electric vehicle (EV) giant missed EPS estimates on three occasions and beat on the other, with the average negative earnings surprise being 11.1%.

Tesla, Inc. Price and EPS Surprise

Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote

Q4 Earnings Whispers for Tesla

Our proprietary model doesn’t conclusively predict an earnings beat for Tesla this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

TSLA has an Earnings ESP of +3.15% and a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping TSLA’s Q4 Results

In the fourth quarter of 2025, Tesla sold 418,227 vehicles (comprising 406,585 Model 3/Y and 11,642 other models), down 16% from the corresponding quarter of 2024. The deliveries also lagged our model estimate of 448,384 units. Withdrawal of the $7,500 federal EV tax credit and intense competition from Chinese EV makers are likely to have weighed on Tesla’s sales in the fourth quarter of 2025.

It wasn’t just Tesla that bore the brunt of this withdrawal of incentives. Legacy automakers, like Ford F and General Motors GM, also posted sharp declines in EV sales for the three months ending in December. Ford and General Motors’ EV sales dropped more than 50% and 40%, respectively.

Weak deliveries are likely to have put pressure on Tesla’s automotive revenues as well as automotive margins. But the company’s energy generation and storage business is likely to somewhat offset the downside. Tesla’s energy business is performing well on the back of the strong reception of its Megapack and Powerwall products. In the fourth quarter of 2025, Tesla deployed a record 14.2 GWh of energy storage products, beating our projection of 12.5 GWh. We expect TSLA’s fourth-quarter 2025 revenues from this unit to increase 11% year over year. Additionally, our model also forecasts year-over-year growth of 20% in revenues from the Services & Other segment.

However, strong performance of the Services and Energy businesses is not likely to offset the sluggish results from the Automotive unit, thereby dragging the overall fourth-quarter 2025 revenues and earnings of Tesla.

Tesla Price Performance & Valuation

Over the past three months, shares of Tesla have declined 4.5%, underperforming the industry as well as peers like General Motors and Ford.

3-Month Price Comparison 

Tesla stock is quite overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 13.2, higher compared to the industry as well as its own 5-year average.

Avoid TSLA Stock for Now

Tesla’s delivery slowdown highlights the growing pressure on its core EV business. Low fourth-quarter deliveries pushed Tesla’s 2025 sales volume down for the second straight year. Another thing to be noticed here is that the rate of sales decline has also increased in 2025. In 2024, deliveries were down 1% on a year-over-year basis. In 2025, the year-over-year decline was more than 8%. A muted EV landscape, stiff competition and an aging product lineup have been hurting Tesla’s sales.

And because of that, CEO Elon Musk is pivoting toward autonomous vehicles and artificial intelligence, considering those as the next fuel engines for the company. However, meaningful revenues from these projects are years away. As it is, Tesla has a lot of catching up to do in the robotaxi space, given Waymo’s lead. Scaling robotaxis beyond pilot programs and turning AI-led projects into consistent revenue streams will take time. For now, Tesla is a high-risk, high-reward stock.

Regardless of fourth-quarter earnings, Tesla isn’t worth buying now. Investors will pay closer attention to management’s outlook on 2026 deliveries and updates on robotaxis and Optimus than to the headline numbers. Given the near-term headwinds and execution risks, Tesla is best avoided at this stage.

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This article originally published on Zacks Investment Research (zacks.com).

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