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Brokerages Stand by Tesla Despite Sharp Drop, See Long-Term Upside

Tesla Stock Sees Sharpest Decline in Over Two Months Despite Record Q3 Deliveries

  • Tesla reported third-quarter vehicle deliveries of 497,099, exceeding analyst estimates.
  • Shares of Tesla fell 5.1% following the announcement, despite the strong delivery numbers.
  • The jump in deliveries was largely attributed to the expiration of a $7,500 federal electric vehicle tax credit in the U.S.
  • Brokerages maintained bullish long-term outlooks, citing Tesla’s position in autonomous driving and technology innovation.
  • Analysts expect short-term demand to weaken, but forecast growth to rebound as Tesla expands lower-priced vehicles and self-driving capabilities.

Tesla reported delivering 497,099 vehicles in the September quarter, marking a 7.4% increase compared to the same period last year and surpassing the consensus estimate of 443,000 vehicles. The company’s shares closed 5.1% lower at $436 on Thursday, their sharpest decline in over two months, before gaining 0.8% in after-hours trading.

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The surge in U.S. demand coincided with the expiration of a $7,500 federal electric vehicle purchase tax credit on September 30. This contributed to much of the quarterly increase, as buyers moved to secure the incentive before it ended. The positive quarterly performance followed a 33% rally for Tesla shares in September, leading to a “sell-the-news” response from some investors who viewed the jump as temporary.

Gene Munster, managing partner at Deepwater Asset Management, said the strong results were mainly driven by a 35% quarter-on-quarter rise in U.S. sales due to the tax credit’s expiration. He stated, “Investors should largely throw out the positive number,” adding, “the future will be autonomy.” Munster forecast December-quarter deliveries could decrease 5%–10% year over year, but expects growth to resume between 2026 and 2027 as Tesla increases production of lower-priced models and self-driving vehicles.

Future Fund Managing Partner Gary Black noted the market reaction was in line with expectations, stating that most of the third-quarter gain resulted from consumers accelerating purchases ahead of the ending tax credit. He wrote on X that analysts are unlikely to raise their 2025 delivery estimates and will likely subtract the third-quarter boost from future forecasts.

RBC Capital described Tesla’s quarter as better than anticipated, maintaining its ‘Outperform’ rating and $325 price target. Morgan Stanley also judged the results as strong, seeing the delivery numbers at the high end of their expected range and kept its ‘Overweight’ rating with a $410 price target. Wedbush Securities called the quarter a “massive bounceback,” reaffirming its ‘Outperform’ rating and $600 price target, and forecast that Tesla’s AI and robotics roadmap could lead to a company valuation of $2 trillion–$3 trillion by 2026 or 2027.

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Market opinion has remained mixed, with some predicting a rebound in share price and others expecting a slowdown in sales, bringing more focus to Tesla’s development of self-driving systems and robotics. So far in 2025, Tesla’s stock is up 8%.

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