Tesla (TSLA) Stock: Wall Street’s ‘Insane’ Valuation Call Post-Robotaxi Launch—What’s Next?

Wall Street’s jaws hit the floor as Tesla’s Robotaxi debut sends TSLA valuations into orbit—critics call it ‘unhinged.’

The Hype vs. Reality Check

Elon’s latest moonshot has analysts scrambling. One whispers ‘bubble,’ while bulls double down on AI-driven euphoria. Spoiler: The Street still can’t agree if this is genius or gambling with shareholder cash.

The Cynic’s Corner

Another day, another Tesla narrative pivot—because nothing fuels a stock like vaporware promises and legacy auto’s existential dread. Meanwhile, the Fed watches from the sidelines, sipping its latte.

TLDR

• Tesla’s robotaxi service debuted in Austin with a small driverless fleet in a geofenced area for limited users
• The stock trades at 10 times revenue with a forward P/E ratio of 178, compared to S&P 500’s 21 times
• Earnings per share estimates for 2025-2027 have dropped 77%, 70%, and 71% respectively since October 2022
• EV tax credits that represent 52% of Tesla’s profits may be eliminated under the Trump administration
• Barclays maintained “Equal Weight” rating with $275 price target, calling the launch “rather uneventful”

Tesla’s weekend robotaxi launch in Austin has investors split on whether the electric vehicle Maker can justify its sky-high valuation. The debut ran smoothly but on a limited scale.

The company operated a small fleet of driverless vehicles in a restricted area. Only select users could access the service during the trial run.

Barclays analyst Dan Levy called the event “rather uneventful with no major issues.” He maintained his Equal Weight rating with a $275 price target.

The launch comes as Tesla faces serious questions about its valuation. The stock trades at 10 times revenue, which one strategist called “insane.”

Valuation Concerns Mount

Washington Crossing Advisors’ Chad Morganlander highlighted the disconnect between Tesla’s price and fundamentals. The firm manages about $2 billion in assets.

Tesla’s forward price-to-earnings ratio sits at 178 times. The S&P 500 trades at roughly 21 times by comparison.

“This stock trades at ten times revenue,” Morganlander said. “You have a multiple that’s insane.”

The valuation looks even more stretched when considering earnings trends. JPMorgan data shows consensus EPS estimates have plunged since October 2022.

Estimates for 2025 have dropped 77%. The 2026 and 2027 projections fell 70% and 71% respectively.

Competition and Challenges

Morganlander prefers Alphabet’s Waymo service over Tesla’s robotaxi ambitions. Waymo launched driverless taxis in Phoenix back in 2018.

“Waymo has been proven, and it’s working in many cities,” he explained. The service operates in multiple locations with a longer track record.

Tesla faces the challenge of convincing car owners to let strangers use their vehicles. Morganlander questioned whether people WOULD “let your car go out in the middle of the night and pick up drunk people.”

The company also confronts regulatory headwinds. EV tax credits that boost Tesla sales may disappear under the TRUMP administration.

JPMorgan estimates these subsidies represent about 52% of Tesla’s current profits. Their elimination could wipe out a large chunk of earnings.

Mixed Analyst Views

Despite the concerns, some analysts see potential in the robotaxi launch. Bulls view the Austin debut as the start of a new chapter for Tesla.

They point to the technology working without major glitches. Revenue generation from driverless rides marks a key milestone in their view.

“Bulls will point to yesterday’s event as the start of a new era for Tesla,” Barclays noted in its research report.

However, skeptics remain unconvinced about the timeline. Innovator ETFs strategist Tim Urbanowicz warned about Tesla’s history of delays.

“It always takes longer than Elon Musk thinks and investors think,” he said. “We have to be really conscious of that.”

The stock closed at $340.47 on Monday, down 2.35% for the day. It gained 0.03% in pre-market trading on Tuesday.

Tesla reported first-quarter earnings misses in April due to weak EV demand and CEO Elon Musk’s political activities. The company continues to face pressure from declining sales and profit margins.