I'm LongbridgeAI, I can summarize articles.Tesla, a rare founder-led tech giant under Elon Musk, faces high expectations ahead of its July 22 Q2 earnings report. While EV sales rebounded with a 25% increase in Q2, the stock is down 15% year-to-date. Growth drivers include services revenue and future prospects like Optimus robots and unsupervised FSD. Analysts see an 11.5% upside to $425, viewing the investment as a bet on Musk's vision amid competition from Rivian and Chinese automakers.
Great companies are often launched by great leaders -- but often they don't stay that way. Larry Page and Sergey Brin founded Google, which is now known as Alphabet. Apple had Steve Jobs. Microsoft had Bill Gates. Jeff Bezos ruled Amazon. All four companies continue to prosper under new leadership.
But then you have a handful of leaders who continue to helm the companies they led to greatness, such as Elon Musk and Tesla (TSLA 2.47%). Tesla has grown into a dominant electric vehicle company, largely due to Musk's personality and vision, which have attracted legions of so-called "Musk fanboys."
Tesla has matured into one of the world's largest companies, with a market capitalization of $1.6 trillion. But Musk's ambitious vision for Tesla, including the Optimus robot and unsupervised full self-driving technology, continues to dominate, keeping Tesla's valuation sky-high.
TSLA PE Ratio (Forward) data by YCharts
There are huge expectations baked into Tesla stock, and the stock price is down 15% so far this year. With the company scheduled to report second-quarter results on July 22, can Elon Musk turn the tide for Tesla?
Tesla at a glance
Tesla's core business remains its electric vehicles, including its popular Model 3 and Model Y lines. In the second quarter, Tesla sold 480,126 vehicles, with 467,762 coming from its two most popular lines. Sales in the quarter were up 25% -- a welcome turnaround from 2024 and 2025, when Tesla had annual declines in automotive sales.
But the fastest-growing segment is its services, which include automotive services, Robotaxi, and its full self-driving software subscription. While FSD can currently only be used with a driver behind the wheel, Musk has high hopes that unsupervised FSD will be approved for widespread use at some point. Services revenue jumped 42% in the first quarter from a year ago, reaching $3.74 billion.
However, Tesla's biggest opportunity likely lies in the company's planned Optimus robots. Cathie Wood, head of Ark Invest, has predicted that Optimus will transform both home and factory life in 2028 and 2029 and attributed Tesla's leadership in robotics to Musk's "dogged determination."
Image source: The White House.
Is Tesla a buy before earnings?
Like always, there's a lot going on with Tesla. Musk isn't involved with the U.S. government anymore, and the Department of Government Efficiency (DOGE) has disbanded. But Musk is still incredibly busy; he successfully brought his other major company, Space Exploration Technologies, public in June, and there's already speculation that SpaceX and Tesla will merge, perhaps within a year. But even if they don't, SpaceX's work with artificial intelligence, energy storage, data centers, and large language models will, in all likelihood, support Tesla's efforts to perfect unsupervised FSD and make Optimus robots successful.
If Tesla were merely an automaker, I think there would be cause for concern about the stock. Rivian Automotive is rolling out software updates that will pressure Tesla's EV leadership, and Tesla faces significant competition in Asia from Chinese automakers like BYD. However, Tesla is much more than an automotive company -- there's a reason why its shareholders granted Musk an incentive-based compensation package valued at up to $1 trillion. Analysts surveyed by Yahoo Finance have a consensus price target of $425, which represents potential gains of 11.5%.
As Wood and Tesla's legion of retail admirers point out, a bet on Tesla stock is largely a bet on Musk himself. With auto sales up big from a year ago, I'm expecting improved revenue for the quarter, but much of what happens with Tesla will ride on Musk's earnings call with analysts and how well he sells his vision for where the company is headed over the next 12 months.