Tesla earned $4.4 billion of operating profit over the last year while capex runs above $25 billion. At $377.69 the stock needs autonomy to pay off. I expect $330 in twelve months, 13% lower.
Key points
- $4.4 billion operating profit over the last four quarters, a 4.2% margin, on $103.6 billion of revenue.
- $25 billion+ planned 2026 capital spending, against Q2 free cash flow of negative $1.1 billion.
- $330 a share is my 12-month target, 13% below the $377.69 price.
The call
The price asks for a large profit jump. At $377.69 the market value is about $1.49 trillion. On my 2028 profit estimate of $3.00 a share, that is 126 times earnings.
I believe growth arrives but pays slowly. Sales are up 25% in Q2, yet operating margin fell to 1.4% from 10.8% two years ago. Spending on AI, robots and chips is rising. Robotaxi unit economics are unproven and European approval of supervised FSD (driver-assisted self-driving) is slipping.
Operating income vs capital spending ($ billions per quarter)Source: Tesla 10-K and 10-Q XBRL facts, quarters to June 2026
Valuation
| Item | Figure |
|---|
| 2028 revenue estimate | $150 billion |
| 2028 operating margin | 8% |
| 2028 earnings a share | $3.00 |
| Multiple on that EPS | 110 times |
| 12-month target | $330 a share |
I use 110 times, still far above any car maker, because storage and software deserve a premium. The price needs about 126 times, so a rich multiple is already paid. If autonomy works, the upside is large but uncertain. Options imply a 14% move by December, so a 13% downside is within normal swings.
Risks
- Robotaxi or Optimus scale faster than I assume. Watch unsupervised miles and paid rides on the October 21 call.
- Rates fall and growth stocks rerate. Watch the 10-year yield, now 5.27%.
- Storage margins rebound from 20.4% toward 30%. Watch energy gross margin on October 21.
What would change my mind
Disclosed paid robotaxi revenue with positive contribution margin, or operating margin back above 8% with capex funded from cash flow.