Should You Buy Tesla Stock Before July 23?

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As an ardent Tesla (TSLA) investor, I’ve grown accustomed to the rollercoaster ride that comes with this innovative stock. Over the past decade, it’s soared and dipped, but the last eight months have been a particularly thrilling journey!

Amidst the current events affecting the company, such as the forthcoming robotaxi launch, a dip in worldwide sales, and others, the upcoming earnings report on July 23 will undoubtedly garner increased scrutiny, perhaps even surpassing the usual level of interest typically reserved for Tesla’s earnings. Given this heightened attention, is it advisable to invest now?

Tesla’s core business is under threat

Instead of getting caught up in all the buzz surrounding Tesla and its advanced technologies, it’s essential for investors to assess the company based on what it accomplishes today – as a manufacturer of electric vehicles (EVs). Although investing does involve considering the future, it’s crucial not to lose sight of the current situation. By examining how the company meets its short-term objectives, you can better gauge whether it will be successful in achieving its long-term aspirations.

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In the realm of electric vehicle (EV) manufacturing, I can’t help but be struck by Tesla’s remarkable success. Compared to emerging players such as Rivian and Lucid, who are still grappling with financial losses, Tesla stands out as a profitable powerhouse within its own country. When stacked against established automakers like Ford and General Motors, Tesla’s profit margins are truly astounding. Despite having approximately half their revenue in 2024, Tesla managed to surpass both companies in terms of net income.

Despite Tesla’s impressive achievements, it appears that its primary operations are experiencing challenges. Sales numbers are dropping, and the company is grappling with escalating manufacturing costs, which have led to price adjustments – initially reduced to stimulate sales and later increased due to President Donald Trump’s tariffs. These changes were made after Tesla’s last financial reporting period, so we won’t fully comprehend their effects until this summer. However, the first-quarter report indicated a steep drop in earnings, over 70% compared to the same quarter of the previous year – a significant setback.

CEO Elon Musk’s public profile is affecting the business

During the initial three months, there was a 25% decrease in sequential revenue compared to the previous quarter. Moreover, during the second quarter, our deliveries dropped by 13% when compared to the same period last year. Data from particular markets indicate that Tesla’s sales are plummeting dramatically, while overall electric vehicle sales are experiencing growth.

Could it be that the drop in sales is due to several factors? One possible reason could be the delays incurred during the upgrade process of the Model Y SUV, which Tesla has been working on to optimize production for its launch. Although these delays might have played a role, I believe the main contributor to the issue is the controversy that has surrounded CEO Elon Musk.

Elon Musk, a vocal figure at Tesla, temporarily handed over daily management responsibilities. Firstly, he accompanied President Trump during his election campaign, and later joined the Department of Government Efficiency (DOGE) upon its formation within Trump’s administration. Although he has since returned to Tesla, my view is that his political involvement left lasting, negative impacts on Tesla’s brand image.

The harm he inflicted is tough to reverse and seems to have come at an incredibly inconvenient moment. Once a leader in quality and technology, Tesla now finds itself in a more competitive environment than ever before, particularly from prominent players, notably China. BYD has surpassed Tesla in various significant markets.

The future could be big — but will it come?

If Tesla successfully launches its global robotaxi service and creates practical domestic robots as promised, it’s possible that some of its current difficulties may be alleviated. These are significant market prospects that might outperform or even match Tesla’s electric vehicle business in size. However, I remain skeptical about Tesla’s ability to fulfill these promises, particularly within the timeframe the company has suggested.

It can be observed that Elon Musk often makes bold claims, but his delivery tends to fall short of expectations. For instance, he expressed high confidence that a million Tesla autonomous taxis would hit the roads as early as the following year, which was in 2019 – a prediction that has yet to materialize, and one among many similar promises that have not been fulfilled.

In a nutshell, the latest robotaxi debut in Austin didn’t quite live up to expectations, considering earlier promises and the longer-standing operations of Tesla’s rivals in multiple cities with less regulation for over a year.

Several contenders boast support from financially robust corporations, similar to Tesla. However, it’s important to note that achieving fully autonomous vehicles and robotaxis might take longer than some investors anticipate for Tesla. It’s also possible that another company could beat Tesla in being the first to realize this technology.

As an ardent observer in the financial world, I find myself hesitant about jumping into the Tesla bandwagon before their July earnings report. The stock’s astronomical forward-looking price-to-earnings ratio gives me pause. Despite the allure of potential returns, I’m not convinced that this company can consistently deliver on its ambitious promises, at least not in the near future.

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2025-07-17 15:02