Tesla (TSLA) plunges for 4th day... Morningstar says 'Buy now'

▲ Tesla (TSLA), Autopilot, Bear Market/AI generated image

Tesla (TSLA) has fallen for four consecutive trading days due to an earnings shock. Morningstar evaluated the stock price adjustment as a buying opportunity.

According to the U.S. investment information platform StockTwits on July 28 (local time), Tesla's stock price fell by 1% on Monday and an additional 2% in pre-market trading on Tuesday. The 14-day Relative Strength Index (RSI) dropped to 27.34, its lowest since March 2025. This is also below 30, which is typically considered an oversold criterion.

Dave Sekera, Morningstar's Chief U.S. Market Strategist, maintained Tesla's fair value at $450. This is approximately 46% higher than the price at the time of writing. Sekera stated, "The current stock price level looks very attractive," adding, "If you've been looking to own Tesla shares, now is a good time to start investing."

Tesla's Q2 adjusted earnings per share (EPS) was $0.33, falling short of the market forecast of $0.54. Revenue exceeded expectations at $28.24 billion, but operating profit decreased by 57% year-over-year to just $398 million. The operating profit margin also dropped to 1.4%.

Capital expenditure in Q2 increased to $5.79 billion. Free cash flow turned negative for the first time in two years, recording a deficit of $1.09 billion. Tesla CEO Elon Musk said, "We need to increase capital expenditure as quickly as possible within a reasonable range, without being overly wasteful." Tesla expects capital expenditure to exceed $25 billion in 2026.

Tesla is concentrating its funds on robotaxis, Cybertruck, Optimus, AI computing facilities, and semiconductor production. StockTwits' individual investor sentiment shifted from neutral to bearish, and the number of posts in 24 hours surged by 237%. Tesla's stock price has fallen approximately 31% since the beginning of the year, showing the weakest performance among the Magnificent Seven.

[Key Article Summary]

-Tesla's stock price fell for four consecutive trading days, and the Relative Strength Index dropped to 27.34, an oversold zone.

-Morningstar maintained a fair value of $450, estimating an upside potential of approximately 46%.

-Tesla's Q2 operating profit decreased by 57%, and free cash flow recorded a deficit of $1.09 billion.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. This content should be interpreted for informational purposes only.*