Tesla stock received a strong endorsement from Wall Street firm Melius, which labeled it a 'must own' investment in a note released early this week. Analyst Rob Wertheimer highlighted Tesla's leadership in self-driving technology and autonomy as key drivers of future growth. This positive outlook contrasts with bearish views citing declining deliveries and intensifying competition.
Tesla (TSLA) shares rose over 6% to around $416 on Monday, following a bullish note from Melius Research. Analyst Rob Wertheimer described Tesla as poised to lead in world-changing technologies like self-driving cars, autonomy, and Robotaxi services. He argued that 'the world is about to change, dramatically,' with autonomy representing a $7 trillion sector, potentially shifting hundreds of billions in value to Tesla. Wertheimer emphasized Tesla's advantages, including its massive data pool from vehicles, the shift to end-to-end neural nets in 2021 and 2022, and the upcoming AI5 chip for wider rollout in 2027. He noted that only 'tens of thousands' have experienced Full Self-Driving (FSD) version 14, predicting widespread adoption will 'shock most people.' Melius views Tesla as the sole true winner in the industry, stating, 'Our point is not that Tesla is at risk, it’s that everybody else is.'
This optimism aligns with other recent analyst updates. Piper Sandler reaffirmed a $500 price target after touring the Fremont Factory and testing FSD v14, calling it 'truly impressive' and possibly 'better at driving than the average American.' Stifel raised its target to $508, citing progress in robotaxi rollout to 8-10 major cities by end-2025, including Austin without safety drivers. TD Cowen maintained a $509 target post a Giga Texas tour. Tesla's Q3 earnings beat expectations with $0.50 EPS versus $0.48 consensus and $28.10 billion revenue against $24.98 billion forecast.
However, challenges persist. Deliveries fell 6% in the first nine months of 2025, U.S. EV market share dropped to 38% by August from 80%, and global growth was negative at -11% January-August. Bearish analyses point to CEO Elon Musk's divided focus across multiple companies, reputation issues from partisan politics, and lack of durable competitive moat amid rising rivals like BYD. A National Bureau of Economic Research study suggested sales could have been 67-83% higher without polarization. Valuation remains high at 191.9x forward P/E and near 270x trailing, with market cap around $1.34 trillion.
Institutional interest continues, as Nomura increased its stake by 4.2% to 1.17 million shares worth $373.6 million. Despite insider sales totaling $75.6 million over three months, analysts like those at Melius see Tesla's autonomy push outweighing near-term headwinds.
