Tesla Inc (NASDAQ:TSLA) shares moved higher as delivered a free cash flow beat and reaffirmed key upcoming milestones despite its fourth quarter sales and profits falling short of expectations.
Shares of Tesla added 4.4% at $406 on Thursday afternoon.
Jefferies analysts highlighted that Tesla’s report showed a significant profit and loss miss, with auto margins under pressure due to a 6% quarter-over-quarter drop in average selling prices.
Free cash flow exceeded expectations, aligning with Tesla’s focus beyond core auto hardware, analysts added. Tesla achieved a “remarkable continued reduction” in unit production costs, now below $35,000.
The analysts believe that while Tesla’s 2025 guidance was cautious, it reaffirmed key milestones.
“Nothing new in the outlook, but free cash flow beat and re-iteration of new affordable model (in the first half of 2025), full self-driving and cybercab rollout (in 2026) sufficient to de-stress a downbeat soft 2025 ahead of ‘epic’ 2026 and ‘ridiculously good’ 2027 to 2028,” they wrote.
The company’s guidance suggested margin pressure from lower auto pricing and temporary plant shutdowns for Model Y updates. Tesla also highlighted progress in AI-driven robotics (Optimus), licensing discussions for FSD, and Semi production ramping up in 2026.
Jefferies repeated its ‘Hold’ rating on the stock and $300 price target, which implies downside of 23% at the time of writing.