Investor's Corner
Tesla (TSLA) shares surge amid breakout Q4 earnings, shorts burned with $5B loss
Tesla shares (NASDAQ:TSLA) were on a tear on Wednesday’s trading, ending the day at $580.99 per share. At the time, it seemed like a good level for some bulls to enjoy some of their earnings, especially considering that the release of earnings usually results in TSLA’s trademark volatility. But as it turned out, this time around, Tesla was actually just getting started.
Propelled by yet another breakout earnings report, which saw the electric car maker post $7.3 billion in revenue and an earnings per share of $2.14 in the fourth quarter, Tesla shares saw a meteoric rise in Wednesday’s after-hours trading. This rally continued well into Thursday’s pre-market, with shares trading as high as 11%. Amidst this rise, Tesla bears, who have been dealt numerous blows in the past few months, had to swallow yet another painful, white-hot pill on Thursday.
S3 Partners’ Ihor Dusaniwsky, who actively tracks Tesla’s short interest, noted that shorts have swallowed $5.42 billion worth of mark-to-market losses in January 2020. What’s pretty remarkable was that $1.28 billion of this number came from Thursday’s pre-market movements alone.
Tesla will likely be a polarizing stock for years to come. Even amidst the company’s radical rise since posting its Q3 2019 earnings, Wall Street analysts are still widely divided on the electric car maker. Among analysts surveyed by Bloomberg, 18 have a “Sell” rating on the stock, twice the number of analysts who have a “Buy” rating. Short interest also remains at about 11% of the company’s float, according to data from IHS Markit.
Yet, as TSLA shares climbed following the earnings report on Wednesday, even bearish analysts were forced to adjust their price targets for the company. RBC analyst Joseph Spak, who has an “Underperform” rating on TSLA, adjusted his price target to $530 per share, a far cry from his previous $315 estimate. Spak also admitted to being “misguided” in some of his assumptions about the company, though he continues to insist that Tesla shares are overvalued.
Wedbush also set a new bull case scenario with an optimistic price target of $900 per share. Dan Ives, who was aggravated with Tesla and its executives during the past year’s challenging quarters, recognized that the company’s presence in Shanghai might very well help the electric car maker’s numbers this year.
“We believe hitting the important 500k delivery threshold for FY20 is well within reach as now based on our Chinese demand scenario analysis that Tesla has the potential to hit the elusive 1 million overall delivery vehicle mark potentially two years ahead of our original 2024 projections given this current trajectory aiming now at 2022,” he noted.
Piper Sandler posted a bullish outlook for Tesla, with analyst Alexander Potter raising his price target of $553 to $729 per share. In a note to clients, Potter stated that he is giving Tesla more credit for its operating leverage, saying that the company’s “thriftiness continues to impress.” The analyst also noted that Tesla is on a path towards becoming “the world’s only relevant publicly-listed automaker.”
There comes a point in time when even the most persistent bearish arguments get proven so wrong, they become nothing more than noise. This certainly appears to be the case with Tesla shares, with investors supporting the company due to its improving fundamentals. With shorts hurting from this recent rise, it remains to be seen just how high Tesla could fly in the near future.
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.
Elon Musk pivots SpaceX plans to Moon base before Mars
Elon Musk confirms Tesla Semi will enter high-volume production this year
