Tesla (TSLA) experienced a major stock selloff following an underwhelming robotaxi event, wiping out over $60 billion from its market value. The event, which failed to provide clarity on the robotaxi rollout, regulatory approvals, or the introduction of a more affordable EV, left Wall Street skeptical. This selloff marks a sharp reversal for Tesla, whose stock had surged over 70% since CEO Elon Musk began promoting the company’s AI advancements earlier this year.
CFRA analyst Garrett Nelson compared the event to "watching a movie with a lot of plot twists and special effects" but ultimately leaving investors "scratching their heads." Tesla’s market value had ballooned to over $760 billion prior to the event—more than 14 times General Motors’ (GM) and nearly 18 times Ford’s (F) market cap. However, Friday's 8.78% drop signals that Wall Street may begin reassessing the company’s valuation, which analysts believe is increasingly detached from reality.
Toni Sacconaghi of Bernstein highlighted that Tesla's automotive business is only worth around $200 billion, suggesting that $600 billion of its valuation is tied to less proven ventures, including Full Self Driving (FSD) and robotaxis. These technologies, while innovative, are still far from generating meaningful revenue, and robotaxis may be years away from profitability.
The timing of this disappointment couldn't be worse, as Tesla has been grappling with declining demand and rising competition from GM and other EV makers. Tesla’s operating margins have shrunk to 6.3% in Q2 2024, compared to 14.6% two years prior, further dimming its growth outlook. Guggenheim analyst Ron Jewsikow, who values Tesla at $153 per share, argues that post-event, investors will shift focus back to the company’s fundamentals, which he describes as "quite poor."
This event has raised serious questions about Tesla’s long-term growth potential, as analysts warn that without clearer near-term catalysts, the stock could face further downside.
CFRA analyst Garrett Nelson compared the event to "watching a movie with a lot of plot twists and special effects" but ultimately leaving investors "scratching their heads." Tesla’s market value had ballooned to over $760 billion prior to the event—more than 14 times General Motors’ (GM) and nearly 18 times Ford’s (F) market cap. However, Friday's 8.78% drop signals that Wall Street may begin reassessing the company’s valuation, which analysts believe is increasingly detached from reality.
Toni Sacconaghi of Bernstein highlighted that Tesla's automotive business is only worth around $200 billion, suggesting that $600 billion of its valuation is tied to less proven ventures, including Full Self Driving (FSD) and robotaxis. These technologies, while innovative, are still far from generating meaningful revenue, and robotaxis may be years away from profitability.
The timing of this disappointment couldn't be worse, as Tesla has been grappling with declining demand and rising competition from GM and other EV makers. Tesla’s operating margins have shrunk to 6.3% in Q2 2024, compared to 14.6% two years prior, further dimming its growth outlook. Guggenheim analyst Ron Jewsikow, who values Tesla at $153 per share, argues that post-event, investors will shift focus back to the company’s fundamentals, which he describes as "quite poor."
This event has raised serious questions about Tesla’s long-term growth potential, as analysts warn that without clearer near-term catalysts, the stock could face further downside.