Tesla is approaching its next quarterly earnings release against a backdrop of deteriorating fundamentals — full-year revenue fell roughly 2.9% year-over-year to $94.8B, gross margins compressed to 18.0%, and net margins sit at a thin 4.1%, producing diluted EPS of just $1.08. These figures reflect the cumulative toll of aggressive price cuts across Tesla's lineup over the past year, softening EV demand in key markets, and rising competition from Chinese automakers.

The numbers matter because Tesla trades at a significant premium to traditional automakers, meaning any further margin compression or top-line miss will be disproportionately punished. At 18.0% gross margin, Tesla is well below the mid-20s% levels it posted at its peak, and the market is watching closely to see whether the bottom has been set or whether another leg lower is coming.

The bull case hinges on a margin inflection — if Tesla signals that pricing has stabilized, that Cybertruck ramp is contributing positively, or that energy and services revenue is growing fast enough to offset core auto weakness, the stock could re-rate. The bear case is straightforward: negative revenue growth with thin net margins in a high-multiple stock is a dangerous combination, and any guidance cut or further price action announcement could reset expectations sharply lower.

Key items to watch in the print include automotive gross margin ex-credits, any commentary on the FSD monetization timeline, energy storage deployment numbers, and whether management reiterates or walks back prior volume guidance. With the setup this binary, position sizing into the print carries meaningful two-way risk.