Tesla Stock: Bull vs. Bear Case

Ross Gerber, the Co-Founder, President, and CEO of Gerber Kawasaki Wealth and Investment Management, argued on the Investing.com Bull vs. Bear debate that the Tesla bull case “is more intact than it’s ever been.” He cited Tesla’s cash on the balance sheets, two new gigafactories ramping, and “total dominance” in battery technology and charging.

“Tesla is the leader in EV sales globally, with over 1.3 million in sales and growing to probably over 2M in sales this year,” argues Gerber.

Gerber also viewed Tesla’s recent price cuts on some of its models – a move that many argue reflects increased competition and problems with affordability, as consumers around the world struggle with the highest inflation in decades – as a positive: “(They are) bringing the prices back down to a range where a whole new level of consumers can afford the car, we’ve seen demand skyrocket over the last couple days and week,” he adds, clarifying that recent data shows inventory has dropped dramatically since the price cuts.

In addition, Gerber also said that the adoption of EVs is growing dramatically, and with the U.S. still behind other markets, he sees so much upside in the market and industry.

“Tesla will be like Apple (NASDAQ:AAPL) and capture a large percentage of this upside,” Gerber declared, also saying that EVs are better cars than ICE (internal combustion engine) vehicles.

One important component of Gerber’s belief in the company is its full self driving capability, which he was stunned to find his counterpart had not tried out.

Gordon Johnson, CEO and founder of GLJ Research, argued that the price cuts was hardly a positive sign.

“If you look at their profit per car in Q3, it was around $12,797. They just cut prices by $7,250, so the new implied profit per car on these cuts is $5547,” Johnson. “That’s a 56.7% hit to their margin on these price cuts.”

Johnson argues that for Tesla to get back to profit/breakeven, it will need to grow unit sales by 167.2% year-over-year in 2023. “What that also means is that their roughly 26% auto gross profit would drop to about 12.5%,” he adds, going on to explain that in 2023, Tesla is “going to do around $2.18,” referring to Tesla’s EPS, with the current consensus estimate being $4.20.

He also cited Tesla’s website showing no change in lead times for an order as a sign the price cuts were not actually driving more demand.

All this translates to a bottom line in Johnson’s model of about $2 earnings per share, which is well below analyst expectations and could take the stock much lower. Johnson emphasized that Tesla “is just a car company. This is not a growth company anymore.”

Johnson also said he would not be willing to try the full self driving mode, hinting at the safety concerns that have been raised about the new technology from Tesla.

Tesla reported its 2025 first-quarter earnings on Tuesday, April 22, with EPS of $0.27, $0.15 worse than the analyst estimate of $0.42. Revenue for the quarter came in at $19.34B versus the consensus estimate of $21.4B.

“Against the backdrop of catastrophic expectations, with everything from sales to margins projected to continue the slump, the less-than-bad numbers have been received as welcome news by Tesla investors,” said Thomas Monteiro, senior analyst at Investing.com. “In a curious turn of events, it’s as if numbers show that even at the worst moment, Elon and the team’s operation can still bring a robust $19.3 billion in revenue, with total revenue partly making up for the huge drop in auto revenue.

“If this is the worst it gets for Tesla, then certainly there must be some upside for the stock once tailwinds, such as the highly-awaited cheaper model and the Robotaxi, finally hit the market later this year,”  he continued. “Much like many other companies in the tech space, Tesla has room for significant improvement on the financial side from here if the macro side allows for it — mainly if Trump’s tariff plan doesn’t impose further pain on the already slumping sector. However, as risks remain skewed to the downside on that front, it appears that investors are still willing to take the risk and trust that the worst is already behind them for the broader stock market selloff.”