Investing in Tesla (TSLA) isn’t about cars. Rather, it’s a matter of faith for its loyal fans.
“If you try to look at the normal things like valuation or … earnings expectations, it’s really … not about that,” Robinhood (HOOD) chief investment officer Stephanie Guild, told Yahoo Finance’s Opening Bid.
“It is about [whether] you believe or do you not believe. Are you in or are you out, in terms of the grander vision that Elon has?”
For the retail community that powers the Robinhood platform, the answer has been a resounding “in.” Tesla is currently the second-most-traded stock on the app, trailing only Nvidia (NVDA).
But as Tesla prepares to report its fourth quarter earnings on Jan. 28 after markets close, that faith is facing its most rigorous test yet, driven by growing friction.
The skepticism hovering over Tesla often stems from a simple mathematical disconnect, Guild notes. While traditional automakers are valued on multiples of their current earnings and vehicle deliveries, Tesla’s valuation behaves like a high-growth software company.
At other times, it trades like a speculative AI play, fueled by Musk’s increasingly bold rhetoric. Take, for instance, Musk’s appearance at Davos this week. In a conversation with BlackRock (BLK) CEO Larry Fink, Musk claimed that humanoid robots would one day outnumber humans and solve global poverty.
While these grand predictions provide plenty of belief-based fuel, they contrast sharply with the company’s slowing core automotive business. Tesla’s stock performance in the latter half of 2025 was a rollercoaster, driven by missed delivery targets and weak operational metrics.
Consequently, market watchers may need to brace for a weak report next week. Delivery guidance remains a major question mark, and the aggressive price cuts used to defend market share in 2025 continue to eat into the bottom line.
But Musk will once again pivot the narrative toward the company’s long-term potential in AI and Full Self-Driving (FSD). This robotaxi gamble, or Musk’s “grander vision,” is the cornerstone of the bull case. In Austin, Tesla has started limited, public robotaxi rides without a human safety monitor in the car. However, reports have surfaced that these unsupervised rides are being followed by chase cars with human monitors, suggesting true driverless operation for the public may still be a way off.
Competition is also catching up to, or surpassing, Tesla’s efforts. In 2025, Google’s (GOOG, GOOGL) Waymo logged millions of driverless miles and expanded its commercial operations, much of which took place when Tesla was still perfecting its supervised software. To skeptics, Tesla’s sudden sprint into the robotaxi space may feel like a pivot born of necessity as electric vehicle demand reaches a plateau.
Still, Tesla has been chasing its next source of recurring revenue. Musk recently indicated that regulatory approval for supervised FSD in Europe and China could arrive as early as next month. In a move to accelerate this transition, Tesla officially nixed its Autopilot basic software this week, effectively nudging new buyers toward the $99-a-month FSD subscription.
Should overseas approvals materialize, it would unlock a massive software market, turning one-time car buyers into lifelong subscribers — the ultimate holy grail for Tesla bulls.
Francisco Velasquez is a Reporter at Yahoo Finance. Follow him on LinkedIn, X, and Instagram. Story tips? Email him at francisco.velasquez@yahooinc.com.
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