Wall Street is bracing for what could be Tesla's (TSLA, Financial) toughest earnings moment in years. Analysts expect second-quarter revenue to slide 11% to $22.6 billion—marking the sharpest drop since 2012. Earnings per share are forecast to fall 18% year-over-year. Tesla's core auto business, which contributed 90% of revenue and 94% of gross margin in 2024, is feeling the heat from a production pause tied to the Model Y refresh and intensifying competition in China. The loss of key U.S. EV incentives later this year—including the $7,500 tax credit and regulatory credit sales that generated $2.8 billion last year—is adding more weight to the already-heavy macro headwinds.
But the market isn't walking away. Tesla shares have rallied 50% off their April low, and the bull case now hinges on something far more speculative: robotaxis. Elon Musk's autonomous bet has started limited testing in Austin and may soon expand to California and Arizona. Musk has teased that “hundreds of thousands” could be on the road by 2026. That optimism, however, comes with steep competition. Alphabet's Waymo is already running autonomous rides in several major cities and recently extended its reach via Uber. Uber, for its part, is building its own robotaxi ecosystem alongside Lucid and Nuro.
So why are investors still in? Because Tesla remains the ultimate story stock. Roughly 95% of its market value is tied to future potential, not current profits, according to DataTrek. Compare that to Nvidia (NVDA, Financial) or Microsoft (MSFT, Financial), where the future narrative still only accounts for about 75%. Musk's vision of a fully autonomous future—robotaxis, humanoid robots, and beyond—continues to command market attention. As UBS analyst Joseph Spak puts it, the Tesla story is inseparable from Musk himself. If he can steer sentiment back to execution and long-term innovation, the stock might keep working—despite what the near-term numbers say.
