Tesla trades like the world’s biggest smallcap stock, this analyst says

Roth Capital Markets analyst Craig Irwin reiterated a Buy rating and $505.00 12-month price target on Tesla (Tesla Stock Quote, Chart, News, Analysts, Financials NASDAQ:TSLA) following the company’s fourth-quarter fiscal 2025 results, saying execution across Tesla’s long-term growth initiatives remains intact even as investor focus broadens to include potential implications from developments at SpaceX.

Tesla reported Q4/25 results that exceeded consensus expectations on gross margins, driven largely by a favourable geographic mix shift toward Asia-Pacific markets, where operating costs are lower. Revenue and adjusted EPS came in at $24.9-billion and $0.50, compared with Roth estimates of $26.5-billion and $0.53, and consensus of $24.7-billion and $0.45. Non-GAAP automotive gross margins rose to 17.9%, up from 15.4% in Q3/25 and 13.6% a year earlier, and well ahead of Street expectations.

The analyst reiterated his $505.00 price target, based on a 15.0x revenue multiple applied to 2026 estimates, and said Tesla continues to trade like an emerging growth company where catalysts will play an outsized role in valuation…

Irwin noted that regulatory credit revenue declined more slowly than anticipated, totaling $542-million versus consensus expectations of $389-million, providing an estimated $0.15 pre-tax benefit to adjusted EPS. Regulatory credits were $417-million in Q3/25 and $692-million in Q4/24.

Irwin said 2026 will be a year of accelerating investment, with Tesla planning approximately $20-billion in capital expenditures, up from $8.5-billion in 2025 and well above prior consensus expectations of $11-billion. He said the spending supports six new factories and key programs including LFP batteries, a lithium refinery, CyberCab, Semi, Megapack Texas, and the Optimus humanoid robot. Management reiterated that volume production of CyberCab, Tesla Semi and Megapack 3 is expected to begin in 2026, while the stepped-up investment plan implies potential cash burn of more than $5-billion next year.

Irwin highlighted new disclosures around Tesla’s robotaxi program, with management indicating a fleet of more than 500 vehicles already deployed and plans to enter seven additional U.S. cities in the first half of 2027. Near-term targets include Dallas, Houston, Las Vegas, Miami, Orlando, Phoenix and the Tampa Bay area, with broader U.S. rollout dependent on regulatory approvals. He said details around safety drivers, chase vehicles and tele-operation will be key areas to monitor.

Management also confirmed that the Optimus V3 humanoid robot is expected within the next few months, with initial deliveries targeted for 2027. Tesla plans to repurpose floor space in Fremont, following the discontinuation of the Model S and X, to support Optimus production.

Vehicle deliveries remain a mixed signal, Irwin said. Fourth-quarter deliveries of 418,000 units modestly missed consensus expectations of 422,000, reflecting the wind-down of U.S. federal EV subsidies. Management suggested deliveries may become a less central performance metric as Tesla transitions away from legacy models and toward new platforms, including refreshed Model 3 and Model Y variants and region-specific offerings in Asia.

Irwin left his 2026 estimates largely unchanged, noting management’s guidance emphasizes capacity utilization and demand-driven deployments, with accelerating growth expected in the second half of the year as new capacity comes online. The analyst reiterated his $505.00 price target, based on a 15.0x revenue multiple applied to 2026 estimates, and said Tesla continues to trade like an emerging growth company where catalysts will play an outsized role in valuation.

“We see several positive catalysts ahead,” Irwin said, adding that he would be a buyer on any near-term share price weakness.

-30-