Tesla (TSLA) Stock: Is This 15% Drop a Buy-the-Dip Opportunity?

TLDR

• Tesla shares fell to $398.38 on November 19 despite securing Arizona Transportation Network Company permit for robotaxi operations
• Q3 2025 results showed record $28.1 billion revenue and 497,000 deliveries but net income plunged 37% to $1.4 billion
• Operating margins squeezed from 11% to 6% as AI investments and lower vehicle pricing pressured profitability
• Arizona permit requires safety drivers in vehicles; full autonomous operations not yet approved for commercial service
• Valuation remains elevated at 179 forward P/E with technical support at $380-390 range

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Tesla received approval from Arizona regulators to operate a paid ride-hailing service on November 17. Shares dropped 2.6% to $398.38 the following day.

Tesla, Inc., TSLA

The Transportation Network Company permit came just four days after Tesla filed its application with the Arizona Department of Transportation. This marks the company’s second major robotaxi market after Texas.

But there’s an important limitation. The permit doesn’t allow fully driverless operations yet. Safety drivers or monitors must stay in every vehicle under current state regulations.

Arizona’s Phoenix metro area is already home to Waymo’s extensive autonomous service covering 315 square miles. Tesla now enters direct competition in one of America’s most autonomous-friendly testing grounds.

The company finished its self-certification process for both driver-assisted and driverless testing in September. Conversations with state transportation officials started back in June.

Record Sales Can’t Hide Margin Pressure

Third quarter numbers explain investor hesitation. Revenue jumped 12% year over year to reach $28.1 billion. Deliveries hit an all-time high of 497,000 vehicles, up 7% from the same period last year.

Profitability painted a darker picture. Net income crashed 37% to $1.4 billion. Operating income tumbled 40%. Operating margins shrank to around 6% versus 11% a year earlier.

The company posted its fourth straight quarter of declining earnings per share. Lower vehicle prices, increased incentives, and surging AI development costs ate into the bottom line.

Part of the delivery boost came from customers racing to claim the $7,500 federal EV tax credit before it expired. That demand pulled forward into Q3 could create weakness in the current quarter.

Tesla continues heavy spending on AI infrastructure including chips and data centers. These costs support Full Self-Driving software development but hurt near-term earnings.

CEO Elon Musk told analysts the company aims to launch robotaxis in eight to ten metro areas by the end of 2025. Various regulatory approvals will determine the actual timeline.

Valuation Concerns Persist

Tesla trades at approximately 15 times revenue despite recent pullbacks. The forward price-to-earnings ratio stands at 179. Trailing P/E sits around 286.

Chart analysis shows support in the $380-390 zone. The 50-day moving average climbed to $355-360. Resistance appears near $430-450 with the 52-week peak at $488.54.

Current prices sit 12% above the 50-day moving average and almost 20% above the 200-day. The Relative Strength Index reads around 62, leaving room for gains before overbought conditions return.

Stifel analysts lifted their price target to $508 from $483 while keeping a Buy rating. The firm pointed to faster Full Self-Driving progress and robotaxi momentum as key value drivers.

Arizona’s approval gives Tesla critical regulatory infrastructure for autonomous operations. The state’s history of supporting self-driving technology makes it an ideal launch market, even though human drivers must remain in vehicles for now.

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