Tesla (TSLA) investors received a harsh lesson in fundamentals as the company’s highly anticipated robotaxi event fell flat, triggering a sharp selloff. The lack of details on rollout plans, regulatory approval, and no news on a more affordable electric vehicle left Wall Street unimpressed.
On Friday, Tesla’s stock dropped 9%, erasing more than $60 billion from its valuation. This marked a reversal from the stock’s recent rally, which saw shares soar 70% since Elon Musk began promoting AI in April. Tesla’s market cap had reached over $760 billion—more than 14 times GM’s and nearly 18 times Ford’s—before the disappointing event.
Garrett Nelson of CFRA likened the event to “watching a movie with plot twists and special effects,” leaving analysts “scratching their heads.”
Wall Street is now reassessing Tesla’s lofty valuation, with many analysts warning that it is increasingly disconnected from reality. Guggenheim’s Ron Jewsikow noted that Tesla’s fundamentals are “quite poor,” pointing to a business trading at 100 times next year’s earnings with little free cash flow.
Bernstein’s Toni Sacconaghi estimates that Tesla’s core automotive business is worth $200 billion, suggesting that the remaining $600 billion of its valuation hinges on unproven ventures like Full Self Driving (FSD), robotaxis, and humanoid robots.
With Q3 earnings set to be released on October 23, all eyes are on Tesla’s next big test to prove it can meet investor expectations.