/ December 24, 2025 As the year draws to a close, Tesla’s stock is experiencing a powerful rally. This surge is unfolding against a backdrop of diminishing expectations for its core automobile business, creating a stark contrast between near-term delivery concerns and long-term technological ambitions. The central question for investors is how long the company’s lofty valuation can be sustained by its current fundamentals. The Robotaxi Catalyst The primary driver of recent optimism is tangible progress in autonomous driving. On December 22, Tesla employees shared videos of driverless Model Y vehicles navigating Austin, Texas—notably without a safety driver in the passenger seat. Market observers interpret this detail as a significant signal that the company is advancing toward unsupervised autonomous operation. Prominent investor Gary Black has highlighted several factors underpinning the rally. He points to the removal of safety monitors as an indication of technological maturity, references CEO Elon Musk’s ambitious year-end promises for self-driving capabilities, and notes the planned scaling of the humanoid Optimus robot starting in 2026. Black also reiterates that Tesla currently possesses “the most profitable EV business model in the world.” However, he simultaneously cautions on valuation, noting a forward price-to-earnings ratio around 220 based on long-term estimates, which contrasts with an expected EPS growth rate of approximately 35%. A Notable Insider Move Amidst this rally, a key Tesla bull executed a significant transaction. On December 22, Cathie Wood’s ARK Invest sold approximately 60,715 Tesla shares across three of its ETFs, realizing nearly $29.7 million. This profit-taking move coincided with the stock hitting a new intraday high of $498.83 on the same day. Despite this reduction, Tesla remains a cornerstone holding across ARK’s funds. It constitutes 11.9% of the ARK Innovation ETF, 9.71% of the ARK Next Generation Internet ETF, and 12.5% of the ARK Autonomous Technology ETF. Wood reportedly reallocated some proceeds into crypto-related assets like Coinbase and Circle Internet Group, a shift analysts view as a rebalancing of risk and opportunity rather than a loss of faith in the Tesla narrative. Diverging Fundamentals: Weak Deliveries vs. Strong Price Action While the share price climbs, several analyst firms have revised their vehicle delivery estimates downward for the fourth quarter, highlighting a growing disconnect: Canaccord Genuity reduced its Q4 delivery forecast from 470,000 to 427,000 vehicles, even as it raised its price target from $482 to $551. UBS cut its projection from 429,000 to 415,000 deliveries, maintaining a sell rating and a $247 price target. The FactSet consensus stands at 449,000 vehicles, which would represent a 9.5% decline compared to Q4 2024. For the full year 2025, expectations are for 1.65 million deliveries, a drop of 7.7% from 2024. Further pressure comes from the U.S. market. According to Cox Automotive, Tesla’s November sales in the U.S. fell to a low near levels seen four years ago. The expiration of the federal $7,500 EV tax credit under the Trump administration has impacted overall U.S. electric vehicle demand, which plummeted by over 41% in November.