Valuation bears had another chance to sharpen their claws after Palantir (PLTR) co-founder and a member of the so-called PayPal (PYPL) Mafia, Peter Thiel, reduced his stake by a considerable 76% in his former colleague Elon Musk's company, Tesla (TSLA).
Recent 13F filings revealed that Thiel sold more than 205,000 shares of the EV leader between Q2 2025 and Q3 2025, with the value of the holdings dropping from $86.6 million to $28.9 million. Earlier, Thiel's entire selloff of his Nvidia (NVDA) stake also made headlines as fears around elevated valuations for companies in the AI space get louder.
Yet, is this a slight on Tesla or mere profit booking from Thiel after the TSLA stock mostly recovered this year? TSLA is roughly flat on a year-to-date (YTD) basis and has regained its status as a $1-plus trillion market-cap company swiftly. In the broader spectrum, it is also possible that Thiel may follow the SoftBank (SFTBY) route by investing in Musk's other AI ventures, such as xAI or Optimus humanoid robots.
Notwithstanding this, what should Tesla investors, current or prospective, look at in this development? Let's find out.
Elon Still at the Wheel
After a tumultuous start to the year, things have been looking up for the world's largest automobile company. The biggest boost for Tesla came about recently when the company's shareholders approved the $1 trillion pay package for its mercurial CEO, Elon Musk, with a 75% majority. This development was a major shot in the arm for the company, as undoubtedly, regardless of its strides in various domains, Tesla's biggest asset is Elon Musk.
Naysayers may point towards Musk's perilous experiments, such as his political plunge, high-profile exits, and delayed fulfillment of promises, as risks to TSLA stock, but history has proven that those shareholders who have stood by Musk over the years have been rewarded handsomely. Moreover, it is not like Musk's task of pocketing this historic compensation will be easy, as he has to fulfill several steep operational milestones.
Furthermore, several long-term drivers make a case for investing in Tesla stronger. Notably, Tesla's advancement in robotaxi initiatives and the global rollout of Optimus point to favorable underlying conditions for sustained expansion. For the typical U.S. buyer, competitively priced versions of the Model 3 and Model Y should help maintain domestic delivery volumes, even with the phase-out of federal EV incentives. Thus, analysts continue to forecast healthy earnings progression in the upcoming periods.
During the latest earnings discussion, management expressed assurance in reaching unsupervised Full Self-Driving (FSD) milestones, backed by aggressive capacity ramps tied to autonomy programs. On the production side, the company targets an annual run rate of three million vehicles within the next two years, aligning with its overarching goal of embedding AI and autonomous capabilities across the automotive sector.
Further, a meaningful differentiator remains Tesla's fully domestic manufacturing footprint in the United States, which shields the company from import tariffs and confers a structural edge against foreign competitors.
Beyond vehicles, Tesla's ancillary operations are gaining traction at a steady clip. In the most recent quarter, roughly 25% of total revenue originated from segments outside traditional auto sales and leasing, a notable increase from 20.5% in the comparable period of 2024. This share is poised to grow further, driven by higher-margin activities encompassing energy generation and storage, technology licensing, AI services, data products, humanoid robotics, and related ventures.
However, risks remain, and they are beyond the usual ones of intense competition, political and regulatory vulnerabilities, and valuations. Just as some doubts were raised about the approval of his mammoth pay package, Musk threw a bit of a tantrum and threatened to leave the company altogether. This begs a bigger question: What happens to Tesla if Musk doesn't find the motivation anymore somehow to steer the company and opts for the exit? This is perhaps the biggest risk that Tesla and its shareholders must ponder.
Financially Stable Despite Recent Weakness
Tesla’s recent earnings record reflects an uneven performance, with the automaker beating analyst estimates only a handful of times over the last two years. Even so, the company’s longer-term growth story remains strong, underscored by five-year compound annual growth rates of 27.69% for revenue and 49.09% for earnings.
Meanwhile, the third quarter of 2025 delivered mixed results. Revenue exceeded market expectations, but profitability lagged once again, marking a third straight year-over-year (YoY) decline in quarterly earnings. Tesla posted total revenue of $28.1 billion, up 12% from the same period in 2024. The energy and services divisions powered much of that gain, with revenues advancing 44% and 25% to $3.4 billion and $3.5 billion, respectively. By contrast, the core automotive segment grew just 6% to $21.2 billion, despite a temporary boost as the $7,500 U.S. EV tax credit phaseout came to an end.
Earnings per share fell 31% YoY to $0.50, short of the $0.56 consensus estimate. Operating cash flow remained steady at $6.2 billion, while Tesla ended the quarter with $41.6 billion in cash and equivalents, comfortably outweighing its $1.9 billion in short-term debt obligations.
Vehicle deliveries reached 497,099 units during the quarter, a 7% annual increase, whereas production slipped 5% to 447,450 units. The gap between output and deliveries indicates some volatility in demand patterns and production scheduling as the company navigates a more competitive EV landscape.
Analyst Opinion on TSLA Stock
Thus, analysts have deemed the TSLA stock a consensus “Hold,” with a mean target price that has already been surpassed. The high target price of $600 indicates an upside potential of about 48% from current levels. Out of 42 analysts covering the stock, 14 have a “Strong Buy” rating, two have a “Moderate Buy” rating, 17 have a “Hold” rating, and nine have a “Strong Sell” rating.
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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