Tesla Stock Movement Analysis: Melius 'Must Own' Recommendation vs. Bearish Sentiment on FSD & Financial Health

On 2025-11-24, Tesla’s stock gained attention after a reported 7% pop linked to Melius Research calling it a “must own” due to Full Self-Driving (FSD) technology and Elon Musk’s touting of AI chip progress [1][2]. This event was discussed in a Reddit post, which also included bearish counterarguments from users [1].

Tesla’s stock closed up 3.88% on the event day to $417.78, with a volume of 96.81M (above the 10-day average of ~92.47M) [0]. Over the next two trading days, it gained an additional 2.1% to close at $426.58 on 2025-11-26 [0]. Notably, Tesla outperformed its Consumer Cyclical sector, which declined by -0.07% on the latest trading day, indicating company-specific news drove the gain [0].

• Valuation
  : Tesla’s P/E ratio of 259.24x is significantly above industry averages, suggesting potential overvaluation [0].
• Profitability
  : The net profit margin of 5.55% and ROE of 6.97% are modest, raising questions about sustainability [0].
• Analyst Consensus
  : 40% of analysts rate Tesla as “Buy” (consensus target: $455, +6.7% from current price), while 21.2% recommend “Sell”—reflecting divided expert opinions [0].
• Revenue
  : The automotive segment contributes 78.9% of total revenue (FY2024), making Tesla heavily dependent on vehicle sales [0].

• Bullish
  : Melius Research’s “must own” recommendation focuses on FSD and AI chip progress [2].
• Bearish
  : Reddit users argue FSD is overhyped (Waymo is ahead), financial performance is declining, the stock jump is based on dubious news, and investors are buying repetitive positive narratives [1].

1. Overvaluation
   : High P/E ratio makes Tesla vulnerable to corrections if earnings underperform [0].
2. FSD Execution
   : Concerns about FSD’s competitiveness vs. Waymo and potential regulatory/safety issues [1].
3. Profitability
   : Modest margins and bearish claims of declining earnings may erode confidence [0][1].
4. Repetitive Narrative
   : Diminishing returns on repeated positive news about FSD and AI chips [1].

• Exact details of Melius Research’s FSD and AI chip claims [2].
• Historical financial data to verify declining earnings since 2022 [1].
• Timing/clarity of the reported 7% stock pop [1].
• Regulatory/safety data on Tesla’s FSD [1].
• Recent sales/customer feedback to validate reputation concerns [1].