Is Now the Time to Buy Tesla Before Q2 2025 Earnings

Tesla, Inc. (TSLA) enters Q2 2025 with mixed signals across its financial and technical landscape. In Q1, the company experienced a sharp decline in revenue and profit, primarily due to a decrease in deliveries and rising costs. However, its energy and service divisions showed strong growth, offering some support. Tesla’s expansion in China and entry into India signal long-term growth potential. This article discusses Tesla’s earnings, market catalysts, and technical outlook to assess the next move in the stock. Despite the Q1 earnings decline and economic challenges, Tesla remains a strong buy.

Tesla Earnings Analysis

Q1 2025 Earnings

The chart below shows the Tesla revenue trend, which indicates a strong decline in revenue for Q1 2025. This decline was a 9% year-over-year drop, resulting in revenue of $19.34 billion. The decline in revenue was primarily due to a decrease in vehicle deliveries and a reduction in average selling prices. On the other hand, gains in energy and regulatory credits only partially offset these losses. This drop in core automotive revenue signals weak consumer demand and operational challenges.

The Tesla profitability also dropped along with the revenue. The chart below shows that the operating income plunged 66% YoY to $0.493 billion and margins shrank to just 2.1%. Similarly, the net income also dropped to 0.409 billion.

The drop in profits is due to the rising R&D costs and falling deliveries. Moreover, cost savings have resulted from the ramp-up of CyberTracker, as well as lower raw material costs. The chart below shows that the R&D expenses have surged to $1.409 billion in Q1 2025.

On the other hand, there is a strong rising trend in free cash flow, which has reached $6.78 billion. However, the market has focused on shrinking margins and falling income, leading to a drop in the stock price.

Energy and Services Growth in Q1 2025

Tesla shows strong performance in energy storage and services. This strong performance highlights a growing diversification beyond the automotive sector. Energy Generation and Storage set a new record, crossing 1 GWh in Powerwall deployments for the first time.

Moreover, services revenue grew 25% YoY. Despite not contributing to quarterly deployments, Megafactory Shanghai produced over 100 Megapacks, demonstrating capacity and future scalability. The factory’s localised supply chain and 20 GWh capacity, with potential to double, position it as a key asset to meet global energy storage demand. These developments underline Tesla’s ability to respond to long-term trends in grid stability and electrification.

The company’s services sector continues to benefit from non-warranty repairs and the expansion of supercharging services. With 1.4 TWh of electricity delivered across 42 million charging sessions and over 1,800 new stalls opened, Tesla’s infrastructure advantage is solidifying.

While short-term automotive margins face pressure, the growth in high-margin energy and service segments suggests a stabilising long-term outlook. This diversification could help offset volatility in the vehicle segment and support Tesla’s valuation, particularly as investors seek resilience and recurring revenue amid macroeconomic and trade headwinds.

The company trades at a steep P/E ratio of 176.74, significantly higher than the Nasdaq-100 average of 40.47 and well above peers such as Nvidia (NVDA), Microsoft (MSFT), and Amazon (AMZN). While this suggests Tesla is expensive, such premium pricing often reflects future growth expectations rather than current earnings.

Earnings Expectations and Market Catalysts for Q2 2025

Tesla expects a solid performance in Q2 2025, driven by strong production and delivery numbers. The company produced over 410,000 vehicles and delivered more than 384,000, with the Model 3 and Y accounting for the bulk of deliveries. Additionally, Tesla deployed 9.6 GWh of energy storage products, signaling growth in its non-automotive segments. This momentum supports a stable revenue outlook, despite some macroeconomic headwinds. Tesla expects to report $22.36 billion in revenue, with GAAP EPS of $0.32 and normalized EPS of $0.41.

Key Growth Drivers for Tesla Beyond Q2 2025

The market is likely to be triggered by Tesla’s expansion in China. Tesla unveiled two new variants for the Chinese EV market: the Model YL and the high-range Model 3 Plus. These launches aim to counter fierce competition and slumping deliveries in China. Strengthening its lineup could help Tesla regain market share and reinforce revenue, making this a potential catalyst for the company’s stock.

On the other hand, Tesla officially entered India by opening its first showroom in Mumbai, signalling cautious expansion. High import tariffs result in premium pricing, limiting immediate sales but positioning Tesla for long-term growth as policies evolve. This foundational step may enhance investor confidence by diversifying Tesla’s geographic footprint and unlocking a massive market opportunity.

Moreover, Tesla debuted its Robotaxi in Austin on June 22, but early incidents, such as wrong-way driving, attracted scrutiny from the NHTSA. Meanwhile, Elon Musk’s political moves, such as launching a new party and renewed tensions with Trump, induced volatility in Tesla stock. While the Robotaxi rollout could boost future margins, mixed reviews and political distractions add volatility to Tesla’s stock outlook.

Tesla product expansion, global reach, and strategic innovation could swing investor sentiment. The new models and India entry offer long-term potential, but short-term investor focus may remain on policy risks and the execution of autonomous vehicles.

Long-Term Technical Structure for Tesla Stock

Tesla Holds Above Long-Term Buy Zone

The long-term outlook for Tesla stock is evident in the monthly chart below. The stock price exhibits strong volatility and is trading within a wide range. It started to surge in June 2019, rising from $14.00 to peak at around $414.50 in November 2021. After this peak, the stock dropped and formed a bottom in January 2022. It then initiated another strong rally, reaching a new record high of $488.54 in December 2024.

This record high in December 2024 led to increased market volatility. However, the stock price remains above the buy line for long-term investors, which currently sits near the $180.00 level. Multiple rebounds above this buy line have created a strong bullish setup, visible in the inverted head and shoulders pattern.

The correction from the April 2025 high appears to have formed a bottom, followed by a bullish candle in April 2025, which may signal a new buying opportunity. The long-term trend remains upward, and the stock continues to trade at higher levels.

The stock has maintained momentum following a long-term rally. The company aims to double its turnover, supported by rising stock prices.

Log Chart Signals: Tesla Eyes $1,000 After Breakout

Since Tesla has shown strong volatility, it is easy to analyse the price action on a log scale. The log scale indicates that Tesla stock has exhibited strong bullish price action, characterised by the formation of an inverted head and shoulders pattern since 2022. This formation, followed by a breakout above the black dotted trendline, indicates that Tesla generated a buy signal in April 2025 and is ready to surge higher.

A break above the $500 area in Tesla stock will likely trigger another strong rally. Prices may rise toward the $1,000 level if $500 level is broken. This bullish setup is observed after the formation of triangle patterns from January 2024 to March 2024. The breakout of this triangle in January 2024, followed by a correction in March 2024, produced a strong buy signal that lifted the price from the $30 area to as high as $488. The emergence of this historically bullish price action suggests that the next direction for Tesla stock is likely to be higher.

Broadening Pattern Breakout Points to New Rally

The weekly chart for Tesla stock shows that the price formed a broadening pattern and broke higher in October 2024. This breakout from the broadening wedge pattern pushed the stock price up to the $488.54 area, followed by a strong correction toward the $200 level.

This correction found support at the breakout level of the broadening wedge broken in October 2024. The successful retest of this support line indicates that Tesla has generated a buy signal and is likely ready to surge higher.

Short-Term Bullish Patterns Confirm Uptrend

The short-term price action also shows strong bullish momentum amid significant volatility. The emergence of an inverted head and shoulders pattern from July 2023 to November 2024 suggests that the stock has established a solid bullish foundation, indicating potential for upward movement.

Additionally, the inverted head and shoulders formation from March to July 2024 confirms that the stock had already formed a bottom. The development of a triple bottom line from March to April 2025 has further reinforced a buy signal for long-term investors.

This suggests that the next direction for Tesla stock is likely upward. The price is now breaking above the midline of the RSI, supporting the bullish outlook. Furthermore, the 50-day SMA is crossing above the 200-day SMA, indicating strengthening technical momentum.

Risk Factors

Tesla faces several near-term risks that may limit upside potential. For example, the impact of tariffs on Chinese demand puts pressure on vehicle deliveries and margins. Moreover, rising competition from Chinese automakers, such as BYD, intensifies market share challenges. In addition, regulatory scrutiny, such as investigations into Robotaxi incidents, adds uncertainty. On the other hand, Elon Musk’s political involvement also introduces volatility and may divert attention from the company’s operations. As a result, in Q1 2025, shrinking margins and falling income reduced investor confidence, which in turn dragged down the stock.

High production costs and falling average selling prices remain a concern. Furthermore, tariffs in new markets, such as India, restrict the immediate sales potential. Also, execution risks around autonomous vehicles and delayed factory expansion plans in Mexico may limit future growth. Meanwhile, global trade tensions and economic slowdowns may further impact revenue. Despite this, growth in energy and services provides some support.

Nevertheless, Tesla’s heavy reliance on vehicle sales exposes it to demand shocks. From a technical perspective, a break below $160 will negate the medium-term bullish view in Tesla. Ultimately, these risks could hinder long-term momentum if not addressed effectively.

Is Tesla a Buy Ahead of Earnings?

Tesla presents a mixed outlook ahead of its Q2 2025 earnings. The company has shown strength in energy and services, with strong growth in Powerwall deployments, Megapack production, and supercharging infrastructure. It has also maintained a bullish price structure and technical signals. These developments, along with new model launches and geographic expansion, suggest potential for long-term gains.

However, several risks cloud the short-term view. Margins remain under pressure, and vehicle sales face challenges from tariffs, competition, and pricing issues. While Tesla’s fundamentals and charts indicate strength, the near-term outlook hinges on execution and the market’s response to earnings. Despite these challenges, Tesla’s long-term potential remains strong. Therefore, buying Tesla stock at current levels could be a sound strategy for long-term gains. Investors can consider buying Tesla stock as long as the price remains above $160.