Investor's Corner
Tesla dips amid ‘meager’ Model 3 demand claims despite TSLA’s China, Europe push
Tesla stock (NASDAQ:TSLA) dropped to nearly 5-month lows on Monday, trading as low as $256.02 per share, the lowest since October 22, 2018. The drop in the electric car maker’s shares transpired amidst Wall St’s continued concerns over alleged Model 3 demand issues and Elon Musk’s recent initiative to raise the price of Tesla’s inventory vehicles by ~3%.
RBC analyst Joseph Spak recently cut his price target for Tesla shares by $35 to $210 each in a note published on Monday. Spak trimmed his Q1 2019 Model 3 delivery forecasts to 52,500. This number is 4,500 less than Spak’s previous estimates over what he cited as “meager demand” for the electric sedan. Apart from Spak, JMP Securities analyst Joseph Osha lowered his price target for Tesla by 3% to $394 per share. Osha cites the US market’s weakness and Tesla’s closing of its galleries as among the drivers behind his more conservative stance, though the analyst noted that JMP continues to believe in Tesla’s long-term narrative.
“As we have moved through the first part of 2019, it is becoming apparent that Tesla’s efforts to pull demand into 4Q before the federal tax credit expired worked well, perhaps better than the company had planned. Indeed, based on our analysis we are not sure that U.S. demand will return to 4Q18 levels at any point this year. It is worth reiterating that our investment stance on Tesla has always been based on the potential the company has to make competitive gains over time. The undeniably challenging environment that Tesla faces at the moment is not enough to impact our fundamental stance on the company and its prospects,” Osha wrote.
Concerns about the Model 3’s weakening demand might be overblown, especially considering that Tesla is currently focusing its push for the vehicle in territories outside the United States. This is a key point that seems to be neglected in recent mainstream analysis of the company’s strategy this quarter, as revealed in a recent piece on Model 3 demand from The New York Times. Citing new-car registrations compiled by the Dominion Cross-Sell Report, which concluded that new Tesla registrations “fell significantly” in the 23 US states covered in the report, the publication suggested that the numbers are a worrisome sign for the electric car maker.
While the NYT‘s hypothesis with Tesla’s lower registrations in the US should not be discounted, the company’s lower registration numbers could be explained by Tesla simply not delivering as many vehicles in the United States this quarter compared to Q4 2018. Since January, Tesla has been pushing the Model 3 to Europe and China, two markets that have been waiting for the electric sedan. This is a notable contrast to Tesla’s strategy in the fourth quarter, when all of its production and deliveries were focused in North America. Until Tesla reveals its delivery figures in Europe and China on its Q1 2019 production and delivery report, it seems too early to make assumptions about the sedan’s overall demand, or lack thereof.
To be clear, this doesn’t affect Tesla website order prices. Existing inventory prices are currently slightly lower than on website. This will bring them in line.
— Elon Musk (@elonmusk) March 24, 2019
Tesla is nearing the end of Q1 2019, and the company is putting all hands on deck. A recently shared email from Elon Musk has revealed that the CEO is urging the company’s employees to shift their focus on delivering cars to customers, regardless of their role. Musk was optimistic in his message, stating “This is the biggest wave in Tesla’s history, but it is primarily a function of our first delivery of mass manufactured cars on two continents simultaneously, and will not be repeated in subsequent quarters.” Musk has also announced that Tesla is increasing the price of inventory cars worldwide by ~3% on April 1. The changes would not be affecting the current prices of Tesla’s existing vehicles, and is only intended to bring the costs of inventory cars in line.
As of writing, Tesla shares are starting to recover, trading down 1.18% at $261.41 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
There are a lot of Tesla bulls out there who have astronomical expectations for the company, especially as its arm of reach has gone well past automotive and energy and entered artificial intelligence and robotics.
However, some of the most bullish Tesla investors believe the company could become worth $100 trillion, and CEO Elon Musk does not believe that number is completely out of the question, even if it sounds almost ridiculous.
To put that number into perspective, the top ten most valuable companies in the world — NVIDIA, Apple, Alphabet, Microsoft, Amazon, TSMC, Meta, Saudi Aramco, Broadcom, and Tesla — are worth roughly $26 trillion.
Will Tesla join the fold? Predicting a triple merger with SpaceX and xAI
Cathie Wood of ARK Invest believes the number is reasonable considering Tesla’s long-reaching industry ambitions:
“…in the world of AI, what do you have to have to win? You have to have proprietary data, and think about all the proprietary data he has, different kinds of proprietary data. Tesla, the language of the road; Neuralink, multiomics data; nobody else has that data. X, nobody else has that data either. I could see $100 trillion. I think it’s going to happen because of convergence. I think Tesla is the leading candidate [for $100 trillion] for the reason I just said.”
Musk said late last year that all of his companies seem to be “heading toward convergence,” and it’s started to come to fruition. Tesla invested in xAI, as revealed in its Q4 Earnings Shareholder Deck, and SpaceX recently acquired xAI, marking the first step in the potential for a massive umbrella of companies under Musk’s watch.
SpaceX officially acquires xAI, merging rockets with AI expertise
Now that it is happening, it seems Musk is even more enthusiastic about a massive valuation that would swell to nearly four-times the value of the top ten most valuable companies in the world currently, as he said on X, the idea of a $100 trillion valuation is “not impossible.”
It’s not impossible
— Elon Musk (@elonmusk) February 6, 2026
Tesla is not just a car company. With its many projects, including the launch of Robotaxi, the progress of the Optimus robot, and its AI ambitions, it has the potential to continue gaining value at an accelerating rate.
Musk’s comments show his confidence in Tesla’s numerous projects, especially as some begin to mature and some head toward their initial stages.
Elon Musk
Tesla director pay lawsuit sees lawyer fees slashed by $100 million
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
The Delaware Supreme Court has cut more than $100 million from a legal fee award tied to a shareholder lawsuit challenging compensation paid to Tesla directors between 2017 and 2020.
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
Delaware Supreme Court trims legal fees
As noted in a Bloomberg Law report, the case targeted pay granted to Tesla directors, including CEO Elon Musk, Oracle founder Larry Ellison, Kimbal Musk, and Rupert Murdoch. The Delaware Chancery Court had awarded $176 million to the plaintiffs. Tesla’s board must also return stock options and forego years worth of pay.
As per Chief Justice Collins J. Seitz Jr. in an opinion for the Delaware Supreme Court’s full five-member panel, however, the decision of the Delaware Chancery Court to award $176 million to a pension fund’s law firm “erred by including in its financial benefit analysis the intrinsic value” of options being returned by Tesla’s board.
The justices then reduced the fee award from $176 million to $70.9 million. “As we measure it, $71 million reflects a reasonable fee for counsel’s efforts and does not result in a windfall,” Chief Justice Seitz wrote.
Other settlement terms still intact
The Supreme Court upheld the settlement itself, which requires Tesla’s board to return stock and options valued at up to $735 million and to forgo three years of additional compensation worth about $184 million.
Tesla argued during oral arguments that a fee award closer to $70 million would be appropriate. Interestingly enough, back in October, Justice Karen L. Valihura noted that the $176 award was $60 million more than the Delaware judiciary’s budget from the previous year. This was quite interesting as the case was “settled midstream.”
The lawsuit was brought by a pension fund on behalf of Tesla shareholders and focused exclusively on director pay during the 2017–2020 period. The case is separate from other high-profile compensation disputes involving Elon Musk.
Investor's Corner
Tesla (TSLA) Q4 and FY 2025 earnings call: The most important points
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Tesla’s (NASDAQ:TSLA) Q4 and FY 2025 earnings call highlighted improving margins, record energy performance, expanding autonomy efforts, and a sharp acceleration in AI and robotics investments.
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Key takeaways
Tesla reported sequential improvement in automotive gross margins excluding regulatory credits, rising from 15.4% to 17.9%, supported by favorable regional mix effects despite a 16% decline in deliveries. Total gross margin exceeded 20.1%, the highest level in more than two years, even with lower fixed-cost absorption and tariff impacts.
The energy business delivered standout results, with revenue reaching nearly $12.8 billion, up 26.6% year over year. Energy gross profit hit a new quarterly record, driven by strong global demand and high deployments of MegaPack and Powerwall across all regions, as noted in a report from The Motley Fool.
Tesla also stated that paid Full Self-Driving customers have climbed to nearly 1.1 million worldwide, with about 70% having purchased FSD outright. The company has now fully transitioned FSD to a subscription-based sales model, which should create a short-term margin headwind for automotive results.
Free cash flow totaled $1.4 billion for the quarter. Operating expenses rose by $500 million sequentially as well.
Production shifts, robotics, and AI investment
Musk further confirmed that Model S and Model X production is expected to wind down next quarter, and plans are underway to convert Fremont’s S/X line into an Optimus robot factory with a capacity of one million units.
Tesla’s Robotaxi fleet has surpassed 500 vehicles, operating across the Bay Area and Austin, with Musk noting a rapid monthly expansion pace. He also reiterated that CyberCab production is expected to begin in April, following a slow initial S-curve ramp before scaling beyond other vehicle programs.
Looking ahead, Tesla expects its capital expenditures to exceed $20 billion next year, thanks to the company’s operations across its six factories, the expansion of its fleet expansion, and the ramp of its AI compute. Additional investments in AI chips, compute infrastructure, and future in-house semiconductor manufacturing were discussed but are not included in the company’s current CapEx guidance.
More importantly, Tesla ended the year with a larger backlog than in recent years. This is supported by record deliveries in smaller international markets and stronger demand across APAC and EMEA. Energy backlog remains strong globally as well, though Tesla cautioned that margin pressure could emerge from competition, policy uncertainty, and tariffs.
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