Tesla (NASDAQ:TSLA | TSLA Price Prediction) is the most polarizing stock in the S&P 500. Automotive gross margin snapped back to 21.1% in Q1 2026 from 16.2% a year earlier, FSD active subscriptions hit 1.28 million (+51% YoY), and shares still sit down 6.66% year to date at $419.77. The question is whether Tesla can trade at $700 by July 2029, roughly three years from today.
Why Tesla Shares Are Stuck Despite Margin Recovery
The market is worried about two things. First, Q4 2025 vehicle deliveries fell 16% YoY to 418,227 units and automotive revenue dropped 11%, so the core business is not obviously growing.
Second, operating expenses are surging. OpEx grew 37% YoY in Q1 2026 as AI R&D swallows every incremental dollar of gross profit. With a beta of 1.802, Tesla amplifies every macro wobble. Prediction markets currently assign a 70% probability to a down day today.
Wall Street Sees Almost No Upside. Our Model Sees More.
Consensus is uninspired. The analyst target of $423.40 implies essentially zero return from today, with 5 Strong Buys, 18 Buys, 18 Holds, 4 Sells and 2 Strong Sells. That is 49% bullish, 38% neutral.
Our 3-year framework is more constructive. The base case lands at $488.85, the bull case at $627.76, with 90% confidence. Services revenue grew 42% YoY to $3.75 billion, and unsupervised Robotaxi rides just launched in Dallas and Houston. That is a different business than 2023 Tesla.
The Path to $700 Per Share
Reaching $700 from today’s price of $419.77 would require a gain of 66.8%. With forward EPS of $1.90, a price of $700 implies a forward P/E of 368x. Our base case of $488.85 already implies 232x, meaning the bold target requires additional multiple expansion on today’s forward earnings.
That sounds absurd until you remember the number that matters is 2029 EPS, not 2026. If Cybercab, Tesla Semi, and Megapack 3 hit volume production in 2026 as management has guided, the forward multiple compresses naturally as EPS climbs.
Q1 2026 operating income of $941 million (+136% YoY) and record free cash flow of $6.22 billion for FY 2025 (+73.69% YoY) show the earnings engine is turning. Management stated that “hardware-related profits are expected to be accompanied by an acceleration of AI, software, and fleet-based profits.”
The primary risk is that Robotaxi expansion stalls under regulatory friction, with markets pricing only an 11.5% probability of a California launch by year-end 2026.
Where Tesla Trades Today vs Its Earnings Power
At $419.77 against forward EPS of $1.90, Tesla trades at roughly 220x forward earnings. Shares sit 15% below the 52-week high of $498.83 and well above the 52-week low of $293.55.
Longer term, Tesla has returned 2,804.58% over the past ten years. The valuation only works if you underwrite AI, autonomy, and energy as separate profit streams by 2029.
Can Tesla Really Hit $700? My Verdict
Hitting $700 by 2029 requires a 66.8% gain, and I think it is a stretch rather than a base case.
Three things need to go right: Cybercab and Semi reach real volume, Robotaxi scales beyond the current Dallas and Houston footprint, and automotive gross margin holds above 20%. A regulatory setback in the US or China derails the thesis. We’ve outlined the blueprint for how Tesla could reach $700 in 2029.
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