Tesla investors are grappling with the aftermath of a disappointing robotaxi event that has raised serious questions about the company’s valuation and future prospects. The electric vehicle (EV) manufacturer’s ambitious plans for autonomous vehicles have recently been overshadowed by a lack of clear details regarding rollout strategies and regulatory approvals. These uncertainties have left Wall Street analysts dissatisfied, prompting them to reassess Tesla’s stock, which has seen significant fluctuation in recent days.
During the much-anticipated presentation, expectations ran high, but instead of unveiling concrete plans, CEO Elon Musk showcased enticing concepts like the Cybercab and Robovan. However, the showcase lacked substance, leaving industry experts perplexed. CFRA analyst Garrett Nelson compared the experience to watching a movie filled with intriguing twists, only to leave the theater confused at the end. This sentiment reflects a broader concern: that Tesla’s stock valuation may be increasingly disconnected from its actual performance and growth potential.
In the wake of the event, more than $60 billion vanished from Tesla’s market capitalization as the stock faced a sharp decline. This drop follows a remarkable rally that saw shares surge over 70% since April, when Musk began promoting AI advancements within the company. At its peak, Tesla’s market value soared to over $760 billion, dwarfing competitors like General Motors and Ford by large multiples.
Amid these developments, analysts warn that the latest selloff might only be the beginning of a more significant reassessment of Tesla’s overall worth. Nelson expressed concerns about a growing divide between Tesla’s high stock price and the reality of its earnings growth, which he noted has stalled. Industry observers are now questioning the company’s ability to sustain its momentum, particularly as its operating margins have slipped from 14.6% two years ago to just 6.3% in Q2.
Bernstein’s Toni Sacconaghi echoed these sentiments, emphasizing that Tesla’s robust valuation may not be justifiable based on its current fundamentals. He estimated that while the automotive segment might be worth around $200 billion, the remaining valuation—nearly $600 billion—hinges on less certain ventures like Full Self Driving (FSD) technology and robotaxis. The absence of immediate catalysts for growth comes at a time when Tesla is already facing significant challenges, including lackluster demand and intensifying competition in the EV market.
Analysts like Guggenheim’s Ron Jewsikow predict that investors will likely shift their focus back to the fundamental aspects of Tesla’s business, which he describes as quite weak. With the company’s stock losing around 9% on Friday and falling over 17% year-to-date, the need for tangible and positive developments is urgent.
Looking ahead, investors are keenly awaiting Tesla’s third-quarter earnings report, scheduled for October 23. This earnings call will serve as a critical opportunity for the company to demonstrate its financial health and address the concerns that have led to investor unease. As Tesla navigates this pivotal moment, the emphasis will be on proving that it can deliver on its ambitious promises and not just projections that exist in the realm of speculation.