It has been quite a year for Tesla (NASDAQ:TSLA), with plenty of headlines, intrigue, and developments for the EV maker and its celebrity CEO. Tesla’s share price has ridden surging waves of both hope and despair, starting the year in a free fall before trending back up during the past few months.
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Elon Musk’s divisive political dalliances and government adventures set the tone in the early going, contributing to sliding EV sales as a flurry of tariff worries further depressed consumer sentiment.
A turning point came about in the late spring as Musk shared that he would be decreasing his government duties, sparking a renewed bout of excitement throughout the market. In addition, Tesla’s Q3 EV deliveries came within shouting distance of 500,000, setting a new company record.
The most recent developments revolve around Musk’s gargantuan compensation package, which could be worth almost $1 trillion. That assumes, of course, that he can drive the company towards the successful completion of multiple benchmarks, including an $8.5 trillion market cap, 1 million robotaxis in commercial operation, and 1 million autonomous robots delivered.
Top investor Daniel Sparks would love to partake in this potentially (quite lucrative) growth story. Just not at today’s share prices.
“I believe that at around $220 per share, the stock would still carry a valuation that reflects Tesla’s position in electric vehicles and its growth opportunities in higher-margin businesses,” explains the 5-star investor, who is among the top 1% of stock pros covered by TipRanks.
Sparks is encouraged by Tesla’s turnaround over the past few months, highlighting the company’s Q3 revenue of $28.1 billion (representing year-over-year growth of 12%). In the same breath, however, the investor also mentions Tesla’s falling profitability, as its operating margin fell from 10.8% in Q3 2024 to 5.8% in Q3 2025. Part of this was due to the increase in operating expenses, acknowledges Sparks, which makes sense due to the high costs of Tesla’s ambitious plans.
Therein lies the tension.
“Does the stock’s valuation leave enough room for the risks associated with building out these new product initiatives?” the investor asks. “Investors can already see the strain.”
Sparks concludes that the current valuation simply prices in too much optimism. TSLA is currently trading at close to 170x forward earnings, leaving the share price open to wild fluctuations if hiccups occur. That’s a ride that he isn’t ready to join just yet.
“I’m happy to admire the business from the sidelines and keep my buy price near $220, for now,” sums up Sparks. “While there’s no guarantee shares actually fall to this price, I’ll be ready if they do.” (To watch Daniel Sparks’ track record, click here)
Meanwhile, Wall Street isn’t especially bullish, but it’s not calling for much downside at this stage. TSLA’s 12-month average price target sits at $383.04, implying an 8% downside from current levels. Among 34 analysts, the breakdown comes to 14 Buys, 10 Holds, and 10 Sells, resulting in a consensus Hold (i.e., Neutral) rating. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.