Most Analysts Still Aren’t Bullish on Tesla Stock, Even After Recent Selloff. Here's Why.

Tesla (TSLA) stock has come under significant pressure, falling about 33% from its 52-week high, including a decline of about 18% over the past month. The selloff reflects multiple concerns surrounding Tesla’s growth outlook, margins, valuation, and the timing of its ambitious new initiatives.

While Tesla's stock has already fallen sharply, most Wall Street analysts still aren’t bullish on TSLA. So what exactly is keeping most analysts from backing TSLA stock? Let’s take a closer look.

Tesla’s Margins Remain a Key Concern

Tesla’s second-quarter results offered a mixed picture. While better-than-expected vehicle deliveries helped ease concerns about slowing EV demand and intensifying competition, the company’s profitability came under pressure.

Tesla delivered 480,126 vehicles in Q2, exceeding Wall Street expectations. Deliveries also surpassed production during the quarter, an encouraging sign that helped reduce concerns about rising inventory levels and weakening demand.

Stronger deliveries, growth in its Services business, and improved performance in Energy Generation and Storage helped Tesla’s revenue increase 26% year-over-year (YoY). However, the improvement at the top line did not translate into stronger profitability. Tesla’s adjusted EBITDA margin declined by 353 basis points year over year, while its operating margin fell to 1.4%, compared with 4.1% in the year-ago quarter and 4.2% in the previous quarter.

This sharp compression in margins remains one of the greatest challenges facing Tesla. A major factor weighing on earnings is Tesla’s continued spending on artificial intelligence (AI), autonomous driving, and other research and development initiatives. The company is investing heavily in long-term growth opportunities such as AI, Robotaxi, and its humanoid Optimus robots. While these projects could create significant new revenue streams, they require substantial upfront capital and offer uncertain near-term financial returns.

Tesla continues to expand its AI and autonomous-driving initiatives. FSD (Supervised) penetration increased during the quarter, with more customers choosing subscriptions at the time of vehicle purchase. The company also continued its Robotaxi rollout in the U.S., with the service now available in seven major metropolitan areas. In addition, construction began at Tesla’s Fremont Factory for Optimus production, with initial production anticipated later this year.

These initiatives could transform Tesla from primarily an automaker into a broader technology and mobility company. Successful execution could create substantial revenue opportunities in autonomous transportation, robotics, and AI. However, investors still face considerable uncertainty because these businesses have yet to generate meaningful financial contributions.

The scale of Tesla’s investment is already evident in its spending. Capital expenditures surged 142% in Q2, reflecting the company’s aggressive investment in growth projects and infrastructure. With spending likely to remain elevated as Tesla expands its AI, Robotaxi, and Optimus initiatives, near-term pressure on margins and profitability could persist.

Therefore, while Tesla’s stronger deliveries and expanding non-automotive businesses are encouraging, margin compression remains a critical issue.

TSLA Stock Still Trades at Lofty Valuation

Despite the significant decline in Tesla’s stock price, the company’s valuation remains elevated. TSLA currently trades at 358.2 times forward earnings, a substantial premium to both traditional automakers and many technology companies. Such a high earnings multiple implies that a significant amount of future growth potential is already priced into the shares.

However, the near-term earnings outlook remains challenging. Analysts expect Tesla’s earnings to decline in the double digits in 2026, making the current valuation difficult to justify. While earnings are projected to rebound sharply, with EPS expected to rise approximately 57% in 2027, a considerable portion of that anticipated growth appears to be already reflected in the stock’s valuation.

Given Tesla’s lofty valuation, analysts maintain a “Moderate Buy” consensus rating on TSLA stock.

The Final Takeaway

Tesla’s recent selloff highlights multiple near-term concerns. Although stronger deliveries and progress in AI, robotaxis, and energy storage support the bullish case, severe margin compression, surging capital expenditures, and declining 2026 earnings raise concerns about profitability. More importantly, Tesla’s valuation remains exceptionally high even after the stock’s decline, leaving limited room for upside and keeping most analysts from turning bullish.