Cathie Wood is reducing her stake in Tesla, but remains optimistic about the company’s future with expectations of 70%-80% gross margins from robotaxis and software. Pressure on Tesla’s EV story grows as European sales decline, price cuts impact profitability, and competition from Chinese brands intensifies.
Despite challenges, Tesla climbed in a major automaker survey, reinforcing its brand strength and technological edge. Wood remains bullish on a robotaxi-driven future, doubling down on her optimistic outlook, while Morgan Stanley takes a more cautious stance. The tension lies in whether Tesla can deliver the margins Wood envisions.
Tesla, based in Austin, Texas, has a market value of $1.46 trillion, with a share price of $427.05 and YTD return of -5.4%. The company’s premium P/E ratios and price-to-sales multiple exceed sector medians, indicating a high valuation against its peers.
Tesla’s latest financial results show a missed EPS estimate in Q3 2025, but strong top-line sales growth and net income increase. Operating cash flow surged, supporting Wood’s belief in the potential of autonomous services and high-margin software. A key patent for a dedicated robotaxi fleet aligns with Tesla’s strategic shift.
Tesla’s capital allocation focuses on energy storage systems, with a multi-year supply agreement for batteries. The company aims to deepen its grid-scale storage business, aligning with plans to monetize self-driving capabilities. Tesla is aggressively testing full autonomy in real-world scenarios, moving beyond controlled trials.
Analysts are cautious about Tesla’s upcoming earnings release, with estimates showing a decline in EPS for the current and next quarter. The consensus rating is “Hold,” with an average price target below the current share price. The disconnect between Wall Street and Cathie Wood’s conviction highlights the uncertainty around Tesla’s future.
Tesla faces a dichotomy between its current challenges and ambitious future. Wood’s belief in robotaxis and software driving margins clashes with analyst skepticism. If Tesla can prove the viability of its services and monetization, shares may rise; otherwise, they could stagnate.
Read more at Yahoo Finance: Cathie Wood May Be Trimming Her Tesla Stake, But She Still Thinks the Company Is on Track for 70%-80% Gross Margins