Tesla Stock Takes Off as Analysts Forecast that “The Drop Might Not Be as Bad as Feared”

Tesla stock edged higher as investors looked ahead to next week’s earnings report with renewed optimism. The company’s strong delivery numbers and upcoming model launches are fueling hopes that the drop in earnings “might not be as bad as feared.”

Tesla stock (TSLA) ticked higher on Wednesday morning as investors looked ahead to next week’s third-quarter earnings. Many are betting the electric-vehicle maker could deliver more surprises after a strong quarter for deliveries.

Tesla shares rose 1.3% in pre-market trading to $434.65, extending a steady climb that has lifted Tesla more than 6% this year and 95% over the past 12 months. The rally has also raised expectations that Elon Musk’s company could once again outperform Wall Street’s cautious forecasts.

Analysts Expect a Modest EPS Drop but Room for a Beat

Analysts project Tesla will report third-quarter earnings per share of $0.54, down from $0.72 a year earlier. The lower forecast comes despite a surge in deliveries, with Tesla selling almost 500,000 vehicles versus the roughly 445,000 units Wall Street had expected.

That delivery beat has already nudged EPS estimates slightly higher. Some analysts now believe the company could top expectations when results are announced.

Tesla Faces Focus on Fourth-Quarter Results after EV Credit Loss

Investors are likely to focus as much on the coming quarter as on the one just ended. U.S. buyers recently lost access to the $7,500 federal EV tax credit, which a policy shift expected to weigh on electric-vehicle demand across the industry.

Still, some analysts say the drop-off in sales may not be as sharp as feared. “The magnitude of the drop might not be as bad as feared,” wrote Deutsche Bank (DB) analyst Edison Yu, noting that Tesla’s new, lower-priced versions of the Model 3 and Model Y could help soften the impact.

Tesla Strengthens Its Outlook with New Models and Growth Plans

Yu highlighted that the new “Standard” trims of Tesla’s Model 3 and Y may not count as entirely new vehicles but do expand consumer choice. Each version starts around $5,000 cheaper than the higher-end trims. This provides a buffer against price-sensitive buyers.

Looking further ahead, Yu said the market is watching closely for Tesla’s rumored compact model often referred to as the Model Q or Model 2, which could launch in select markets in 2026 and further expand Tesla’s reach into the mass-market segment.

Is Tesla Stock a Buy, Hold, or Sell?

Wall Street remains divided on Tesla’s next move. Based on 37 analyst ratings in the past three months, the consensus sits at Hold. 15 analysts call the stock a Buy, 13 recommend a Hold, and nine say to Sell.

The average 12-month TSLA price target stands at $365.31, implying about a 16.3% downside from the recent price.

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