Shares of electric vehicle (EV) giant Tesla Inc. NASDAQ: TSLA closed last week at $440, marking the stock’s highest finish of 2025 so far. It capped off a remarkable run of more than 100% since April’s lows and nearly 30% in the past two weeks alone. Ongoing optimism around the company’s non-EV initiatives and CEO Elon Musk’s recent $1 billion insider buy have sent the stock soaring, with bulls continuing to set their sights even higher.
But all of that upward momentum comes with a catch. Tesla’s price-to-earnings (PE) ratio has soared past 250, its richest level in four years, while its Relative Strength Index (RSI) is now flirting with extremely overbought territory. With the company’s Q3 earnings report due in the middle of October, expectations and stakes could not be higher. For investors, this update will likely decide whether Tesla is on its way to $600 or back down toward $300. Let’s jump in and take a look at the argument for each path.
The Bull Case: A Path to $600
As we highlighted at the time, Tesla’s technical breakout in early August set the stage for a strong end to the summer, and that’s exactly what’s played out. Just last Friday, Wedbush Securities refreshed its bullish stance with a new Street-high $600 price target, with analyst Dan Ives calling Tesla an emerging AI leader thanks to its push into robotics and autonomy—future revenue engines he says are still being underestimated.
If October’s report confirms that its margins and deliveries are stabilizing, and its AI initiatives are gaining traction, Tesla’s bulls will have everything they need to keep the rally alive. Musk’s $1 billion personal buy in September remains a powerful signal of confidence, and the bullish analyst updates in the weeks since bode well for the quarter ahead.
A blowout report in October could easily justify the lofty multiple that shares have acquired, and send them racing toward that $600 target. Given the pace of the rally in recent weeks, such a move is not out of the question if momentum continues to snowball.
The Bear Case: Back to $300
Of course, the other side of the story is just as compelling. As we’ve been flagging, Tesla’s U.S. market share fell below 40% this summer, its lowest since 2017. Competition from both legacy automakers and EV startups has been biting into its dominance, and Tesla’s lineup is looking its stalest in years.
Aggressive price cuts in China, Europe, and the U.S. have also pressured margins and left fewer options for a smooth road ahead. If October’s report shows further deterioration in profitability, or if deliveries underwhelm, investors may question whether Tesla deserves to trade at tech-like multiples. With the stock now pricing in perfection, even a modest miss could spark a sharp reversal.
For skeptics, below $350 is the most obvious initial target to aim for if momentum cracks, with little true support waiting until closer to the $300 mark. That would mean giving back a significant portion of Tesla’s recent gains, but with the valuation stretched and RSI signaling overbought conditions, the technical setup leaves plenty of room for a selloff.
The Wild Card: Narrative Around AI and Robotaxis
The plain fact is that beyond its EV business, Tesla’s long-term story is becoming increasingly dependent on Musk’s ability to monetize autonomous driving and robotics. The company’s robotaxi pilot in Austin and its Optimus humanoid robot have been pitched as transformative opportunities, but both remain early-stage and largely speculative.
Therefore, Musk’s updates during October’s earnings call will be crucial in providing credible information on these initiatives. If Tesla can show measurable progress, such as revenue tied to autonomy or tangible advancements with Optimus, investors will have reason to stick with the premium valuation.
But if the AI and robotaxi narratives still look like distant dreams, the bears will argue that Tesla is just an automaker with shrinking market share dressed up in tech multiples. That kind of disappointment, combined with lofty expectations, could be the spark that sends shares tumbling.
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