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Additional Reading from MarketBeat Media Tesla: Some Analysts Are Calling for A 30% Drop—Time to Panic?Written by Sam Quirke. Published 10/18/2025. 
Key Points - Next week’s earnings report could decide whether Tesla’s rally continues into year-end, or collapses.
- Several analysts now see as much as 30% downside from current levels.
- However, bullish voices argue the stock’s long-term AI and robotics story remains intact.
Tesla Inc. (NASDAQ: TSLA) has once again found itself at the center of a fierce market debate. After rallying almost 100% since April, the stock has stalled below recent highs and is now trading around $430. With third-quarter earnings due next week, investors are debating whether this consolidation is healthy or a warning sign. Some analysts are openly calling for a sharp correction, while others remain convinced the long-term story is intact. Either way, the pressure is on. With a price-to-earnings (P/E) ratio near 250, Tesla's valuation leaves very little room for disappointment. The stock has struggled to extend its breakout, and macro worries about a bubble in tech stocks are spreading. This earnings report could well define how the rest of the year plays out. Should investors be worried? Let's take a closer look. The Bear Case Is Getting Louder Think Google/Facebook-style targeting, but smarter, faster, and built for the next era of AI. Major Brands across entertainment, healthcare, and gaming are already using RAD Intel, and the company has backing from Adobe and insiders from Meta, Google, and Amazon. Lock in $0.81 shares today The latest calls for caution came from teams at Industrial Alliance Securities and Evercore ISI, both of which issued updates with a fresh price target of $300 for Tesla shares. A recent close around $430 implies roughly 30% downside based on those bearish targets—a bold call with earnings just around the corner. There's a growing view that the stock's valuation may be stretched, and Tesla faces mounting pressure to defend market share as competition intensifies. Tesla's margins have been under pressure for several quarters as price cuts continue across its lineup. Although the company delivered a strong Q3 delivery report, investors quickly faded the move, suggesting expectations may already be maxed out. Many analysts also question whether robotaxi or full self-driving promises will meaningfully boost profits any time soon. There's a sense that the recent consolidation echoes past peaks: disappointing results in Q1 ended a previous rally of similar magnitude. The worry is that sentiment has again become stretched, and even a solid quarter might not be enough to sustain the rally. Why the Bulls Aren't Backing Down Despite the renewed pessimism, many bulls remain confident. This week Melius Research reiterated its Buy rating and set a $520 price target, implying about 20% upside. Royal Bank of Canada also maintained a bullish view, pointing to the company's long-term growth potential in AI and robotics—particularly the Optimus humanoid project. The bullish case is straightforward: Tesla is more than an automaker — it's a platform company that integrates energy, software, and artificial intelligence. Its global delivery scale, brand strength, and vertical integration provide advantages many rivals will struggle to replicate. Bulls also note that during past pullbacks, Tesla has often found support from long-term investors who treat volatility as buying opportunities. The Real Risk Is Expectations, Not Execution The key question for investors isn't simply whether Tesla is executing; it's whether perfection is already priced in. A P/E of roughly 250 implies investors expect extraordinary earnings growth to continue for years — a tall order for an industry that is cyclical and capital intensive. After the recent rally, even a modest disappointment — slower margin expansion, cautious forward guidance, or weaker regional trends — could trigger rapid selling. The fact that the stock hasn't made new highs in weeks suggests traders are increasingly hesitant to chase. In a year when optimism has already stretched tech valuations, Tesla looks particularly exposed. What to Watch in Next Week's Report Investors will focus on several items in next week's report. First, whether automotive gross margins have stabilized after several quarters of decline. Second, any concrete updates on the revenue path for robotaxi and Optimus initiatives. Third, regional trends in Europe and China, where competition has been intensifying. The bullish narrative could reclaim control if earnings confirm that Tesla's core business remains strong and new growth levers are progressing. But if margins disappoint or forward guidance is soft, those $300 targets from Evercore and Industrial Alliance could start to look less extreme. Investors shouldn't panic, but they should temper expectations. Tesla remains a resilient company with unmatched brand power and deep innovation, but the stock's valuation and recent trading behavior suggest the easy gains may already have been made.
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