Investing.com -- William Blair remains optimistic on Tesla (NASDAQ:TSLA) despite recent setbacks, forecasting that shares will bottom and momentum will rebound as expectations reset.
The firm noted that Tesla’s auto business faces near-term challenges, including weak demand in the U.S. and Europe, competition from Chinese automakers, and a Model Y production changeover impacting supply.
As a result, William Blair lowered its delivery estimates for the first quarter from 418,000 to 350,000 and for the full year from 1.94 million to 1.68 million.
Despite these concerns, the firm remains positive on Tesla’s energy business, citing the faster-than-expected ramp of Megapack production.
Tesla recently announced a third Megafactory in Texas and the first Megapack shipments from its Shanghai factory to Australia.
"As the auto business remains pressured, the energy business will be a big winner in 2025," said William Blair.
Tesla is also making progress in ride-sharing and autonomy, having secured a transportation charter-party permit in California, which allows it to operate a fleet of Tesla-driven ride-share vehicles.
The firm expects the first rollout in Austin this summer and sees Tesla maintaining a lead in autonomous driving despite competition from GM, Nvidia (NASDAQ:NVDA), BYD (SZ:002594), and Zeekr.
Tesla shares currently trade at 42x 2026 EV/EBITDA estimates, down from 64x at recent highs but still a premium to tech peers at 15x.
“Valuation has always been at a premium and getting Tesla shares right has been a function of momentum,” said the firm. “We believe expectations are near a bottom, and as they are reset, shares will bottom and momentum will rebound.”