Tesla’s (TSLA) much-anticipated robotaxi rollout over the weekend has reignited concerns about the stock’s lofty valuation, which some experts argue already assumes mass adoption of autonomous Teslas giving rides for under $10 a trip.
“There’s a lot of jazz hands going on here [with Tesla’s robotaxi launch],” said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, on Yahoo Finance’s Opening Bid (watch above). “This stock trades at ten times revenue. You have a [stock] multiple that’s insane.”
Washington Crossing Advisors, a subsidiary of investment bank Stifel (SF), oversees approximately $2 billion in assets under management.
Morganlander, who owns shares of Alphabet (GOOG, GOOGL), pointed to the more established Waymo autonomous taxi division, which launched its self-driving service in Phoenix back in 2018.
“Waymo has been proven, and it’s working in many cities,” he said. “And we believe that this whole robotaxi idea that you’re going to let your car go out in the middle of the night and pick up drunk people just to make money is perhaps a little bit foolhardy. We would pick Alphabet instead.”
Morganlander’s skepticism comes amid a widening gap between Tesla’s valuation and its financial fundamentals. Beyond the high revenue multiple, Tesla trades at a staggering forward price-to-earnings ratio of 178 — compared to roughly 21 for the S&P 500 (^GSPC).
Adding to the concern, JPMorgan auto analyst Ryan Brinkman notes that Tesla’s consensus earnings per share (EPS) forecasts for 2025, 2026, and 2027 have been slashed by 77%, 70%, and 71%, respectively, since October 2022.
Investors can review those downward-trending EPS projections on Yahoo Finance.
Meanwhile, the EV tax credits that have helped sustain Tesla’s demand and margins may soon disappear under a Trump administration. These incentives have been a crucial support for Tesla’s financials.
Brinkman estimates that EV subsidies currently account for around 52% of Tesla’s profits — a figure that could be erased by Trump’s proposed “big, beautiful bill.”
And in April, Tesla reported earnings and revenue misses for Q1, driven by softening EV demand and growing controversy surrounding CEO Elon Musk’s political actions.
“You look at that multiple and it’s hard to imagine them growing into that in any short period of time,” said Tim Urbanowicz, chief investment strategist at Innovator ETFs, also on Opening Bid. “As with anything that we’ve seen from Tesla, it always takes longer than Elon Musk thinks and investors think. So we have to be really conscious of that.”
Pump Radar
Stock Alerts