I've Covered Tesla for Over a Decade. Here's Whether It's a Stock to Buy More Than 21% Below Its Record.
2026-10-23 03:14
•Daniel Sparks •The Motley Fool
•••• • Axe Cap view
Why Tesla’s Hype Isn’t Enough Right Now
Tesla’s gaudy valuation clashes with sluggish core growth and reliance on tariff refunds in Q3.
Tesla’s recent earnings show a company caught between promise and reality. The headline operating income bounce mainly stems from tariff refunds, not actual sales momentum—revenues have flatlined year on year and operating profit margins halved. Its futuristic bets like Megapack energy storage look interesting, and Robotaxi might turn a profit by 2027, but these are distant prospects rather than today’s drivers. At a nosebleed valuation of 420 times trailing earnings, Tesla is priced for perfection. Investors in South Africa should watch from the sidelines; the rand (USD/ZAR) is far more grounded in tangible fundamentals right now. Without clear signs of sustainable earnings growth or Robotaxi’s business case maturing, the risk of disappointment remains high. If the company’s core turnaround doesn’t happen soon, the current valuation could quickly unwind—cutting deeply into shareholder returns. this is just our opinion and not financial advice
Avoid buying Tesla for now until clear earnings growth and profitability on new ventures emerge. Instead, keep exposure to USD/ZAR modest for currency diversification as global risk appetite shifts.
- TSLA
- USD/ZAR
- Tesla accelerates Robotaxi profitability faster than expected
- Tariff refunds were a one-off but underlying business recovers strongly
5/10
Tesla's Q3 operating income appeared to recover, but over 60% came from tariff refunds rather than core business improvement. Revenue was flat year-over-year at $28.0 billion, marking significant deceleration. While Megapack energy storage shows promise and Robotaxi could become profitable in 2027, the analyst recommends waiting for operating income growth without refunds and concrete Robotaxi profitability metrics before buying, citing elevated valuation at 420x trailing earnings.
Our take is based on reporting first published by The Motley Fool.