Tesla Just Shook the Market—Will It Crash or Soar Next?

Key Points

• Tesla's latest earnings release was disappointing, with Q4 EPS of $0.73 and revenue of $25.71B, which were missed estimates.
• Despite its recent earnings, the stock trades near significant resistance in a bullish consolidation.
• Tesla's energy division grew 113% YoY, and its FSD advancements, including a potential ride-hailing service, could drive long-term upside.

Tesla’s NASDAQ: TSLA latest earnings report sent shockwaves to investors, with earnings per share and revenue missing Wall Street expectations.

The stock initially dropped in after-hours trading but managed to rebound as the market digested the report, with the stock buoyed by optimistic comments made by CEO Elon Musk.

With mixed sentiment surrounding the automotive giant's near-term prospects, let’s take a closer look at the stock’s technical positioning and key fundamental drivers.

Q4 Earnings: A Tough Quarter for Tesla

Tesla reported Q4 2024 earnings per share of $0.73, missing the consensus estimate of $0.76. Revenue came in at $25.71 billion, falling short of the expected $27.26 billion. While revenue increased just 2% year-over-year, automotive revenue declined by 8% to $19.8 billion, reflecting pricing pressures across Tesla’s Model lineup. Operating income took a significant hit, dropping 23% year-over-year to $1.6 billion, while operating margin compressed to 6.2%, down from 8.2% a year ago.

Tesla’s net income plunged 71% year-over-year to $2.32 billion, a sharp decline from the previous year’s $7.93 billion, though last year’s figure was inflated by a one-time $5.9 billion noncash tax benefit. A primary concern remains Tesla’s aggressive price cuts, which have helped maintain sales volume but at the expense of profitability. The company’s first annual delivery decline, coming in at 1.8 million vehicles, raises additional concerns about growth momentum.

Technical Analysis: Key Levels to Watch

From a technical perspective, Tesla’s stock has been highly volatile in recent months. Following its post-earnings dip, the stock is testing key support near $370, a critical level that previously acted as resistance midway through the stock’s remarkable rally following Trump’s election victory. If this support holds, it could signal a buying opportunity for investors betting on continuing momentum and the stock’s uptrend on a higher timeframe.

However, a break below $370 and relative weakness in the market could see Tesla sliding toward its next key support zone between $330 and $360, where buyers previously stepped in during November 2024. On the upside, resistance sits near $420. a level the stock struggled to reclaim recently. If the stock broke above $420, it would confirm a bull-flag breakout, with Tesla’s high of $488.54 then coming into question. The relative strength index (RSI) is currently hovering near oversold territory, suggesting Tesla could be primed for a short-term bounce if sentiment and market positioning improve.

Key Growth Drivers: FSD and Energy Storage

While Tesla’s automotive segment faces headwinds, its Full Self-Driving (FSD) and energy businesses remain compelling long-term growth drivers. CEO Elon Musk reiterated plans to launch an unsupervised FSD option this year, with a potential commercial rollout of a driverless ride-hailing service. Tesla’s recent advancements in artificial intelligence, mainly through its Cortex supercomputer, could further accelerate FSD development.

Tesla’s energy division was a bright spot in the earnings report, with revenue surging 113% year-over-year to $3.06 billion. Energy storage deployments continue to grow rapidly, positioning Tesla as a leader in renewable energy integration. With global demand for energy storage rising, this segment offers a promising diversification beyond vehicle sales.

Bottom Line: A High-Risk, High-Reward Setup

Tesla remains one of the most polarizing stocks on Wall Street. Bulls argue that FSD, robotics, and energy storage will drive Tesla’s next growth phase, while bears point to declining automotive margins and a more competitive EV landscape.

Tesla’s latest earnings report highlights the company’s near-term challenges, but long-term growth catalysts remain intact. The stock’s technical setup suggests that $420 is a crucial level to watch for a breakout, with potential downside if $370 support fails to hold. For investors with an elevated risk tolerance, Tesla’s current pullback from 52-week highs could present an opportunity to buy into its future of autonomy and energy innovation at a relative discount.

With no concrete guidance for 2025, Tesla’s ability to execute on FSD and maintain profitability will be key factors to monitor. Until then, expect continued volatility as the stock navigates both technical and fundamental headwinds.