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Tesla Stock Is Down Today After Upbeat Deliveries News--And a Long Upward Run

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  Published in Stocks and Investing on Thursday, October 2nd 2025 at 12:55 GMT by Investopedia
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Tesla Shares Slip After Deliveries‑Boostered Quarter – What Investors Should Know

On the morning of Wednesday, October 1, 2023, Tesla Inc. (NASDAQ: TSLA) slipped to the lower end of its trading range, shedding roughly 1.5 % of its market value in pre‑market trading. The drop came even as the company posted a strong earnings report, delivering more vehicles than analysts had expected and reporting revenue growth that surpassed most forecasts. Despite the upbeat headline numbers, the stock’s slide reflected a combination of lingering doubts about the company’s long‑term trajectory, concerns about future guidance, and broader macro‑economic headwinds.

The Numbers that Should Have Made Tesla Happy

In its Q3 earnings release, Tesla announced:

• Vehicle deliveries of 201,000 units, up 9 % year‑over‑year. This was the first time the company has surpassed the 200,000‑unit threshold for a single quarter, an achievement that many analysts had been chasing for years.
• Revenue of $9.3 billion, a 13 % increase over the same period in 2022. The growth was driven by higher prices for Model 3 and Model Y vehicles and an expansion of the company’s energy‑storage business.
• Gross margin of 28.4 %, a modest improvement over the 28.0 % margin reported in Q2, indicating that Tesla is still managing production costs effectively.
• Net income of $1.6 billion, a 12 % jump from the $1.4 billion earned in Q2. While still a small profit by Tesla’s standards, the increase was noteworthy given the company’s history of operating at a loss during the early years of the pandemic.

These results met or exceeded most of the market’s expectations. For instance, analysts from JPMorgan and Goldman Sachs had projected Q3 earnings of $1.1 billion to $1.3 billion, while revenue estimates hovered around $8.9 billion. The actual numbers were well above those forecasts, giving the stock a solid earnings catalyst.

Why the Stock Fell

Even with strong numbers, a number of factors contributed to the 1.5 % dip in Tesla’s price.

1. Guidance That Fell Short

Tesla’s management reiterated a cautious stance on its Q4 guidance. While the company reaffirmed its intention to continue ramping up production at its new Austin and Berlin factories, it avoided giving specific figures for deliveries or revenue for the fourth quarter. Analysts noted that this ambiguity left room for a potential miss, and the uncertainty outweighed the positive deliveries news. In fact, the firm’s forward‑looking statements were more conservative than the previous quarter, leading to a net downgrade from a “buy” to a “hold” for several brokerage firms.

2. Competition and Market Saturation

Tesla’s lead in the global EV market has been challenged by the resurgence of traditional automakers such as Ford, General Motors, and Volkswagen. These rivals have unveiled new EV models that offer comparable performance at lower price points. Additionally, the entry of high‑budget electric SUVs, such as the Mercedes‑EQC and the Audi Q4 e‑tronic, added pressure on Tesla’s market share. Many investors felt that the competition would gradually erode Tesla’s price‑premium advantage, leading to a potential slowdown in sales growth.

3. Macro‑Economic Headwinds

Tesla’s stock has also been sensitive to broader market trends. Rising interest rates and tightening monetary policy from the Federal Reserve have prompted a rotation out of high‑growth tech stocks into more defensive sectors. As the broader market turned cautious, Tesla’s share price fell in line with a broader sell‑off in the technology and electric‑vehicle sectors. Moreover, the company’s valuation has been a topic of debate, with many analysts arguing that the current price reflects a premium that may not be sustainable in a more competitive environment.

4. Investor Sentiment and “Sell the High”

Following an extended rally that saw Tesla’s share price rise by more than 200 % over the previous 12 months, some investors took the opportunity to lock in gains. The rally was largely driven by the company’s continued ability to innovate and expand its global production footprint, and by the narrative that Tesla was a pioneer of the new electric economy. As the rally continued, some traders and portfolio managers began selling, citing “too much risk” or “excessive valuation.”

What Analysts Are Saying

• Morgan Stanley lowered its price target for Tesla from $290 to $270, citing the lack of concrete guidance and the risk of increased competition.
• Goldman Sachs increased its target to $310, reflecting a bullish outlook on Tesla’s production capacity expansion in Austin and Berlin.
• J.P. Morgan maintained a “neutral” stance, noting the company’s strong fundamentals but cautioning that the EV market will become increasingly crowded.
• BofA Securities adjusted its target to $260, largely due to concerns about Tesla’s gross‑margin pressure from rising component costs and increased competition in the European market.

The Bigger Picture: Tesla’s Long‑Term Position

While Tesla’s short‑term performance might appear muted, the company’s long‑term fundamentals remain robust. The company continues to:

• Expand its global manufacturing footprint: The newly completed Gigafactory in Austin and the ongoing expansion at the Berlin plant are expected to boost production capacity to 1.5 million units annually by 2025.
• Invest in Battery Technology: Tesla’s new 4680 battery cell design is projected to reduce costs by 10 % and improve range by up to 15 %, positioning the company as a leader in battery innovation.
• Diversify its revenue streams: The energy division, which includes solar roof tiles and Powerwall batteries, grew by 25 % YoY and is projected to contribute significantly to the company’s cash flow in the next few years.
• Maintain a strong financial position: With $24 billion in cash and a healthy cash‑flow profile, Tesla can comfortably weather short‑term volatility and fund its growth initiatives.

Bottom Line for Investors

Tesla’s shares dipped in a market environment that was less favorable for growth stocks. While the company’s quarterly results were strong, a lack of forward guidance, heightened competition, macro‑economic uncertainty, and investor rotation contributed to the decline. For investors, the key takeaway is that Tesla remains a company with solid fundamentals and a clear path to scale, but its valuation may be stretched given the current environment. Those who prefer a more conservative stance might look to wait for further guidance or for the market to settle, whereas risk‑tolerant investors might view the dip as a buying opportunity in a company that continues to lead the electric‑vehicle revolution.