TLDR
- Tesla stock fell 2.2% in premarket trading to $339.20 on Monday as the company prepares for its robotaxi launch in Austin later this month
- The stock has surged 46% since April 22 earnings call when management confirmed robotaxi service timeline
- Tesla trades at 180 times estimated 2025 earnings, double the valuation before first-quarter results
- Morgan Stanley maintains $410 price target despite concerns about Chinese competition and EV price wars
- Long-time Tesla bull Gary Black sold all his shares for first time since 2021, citing high valuation
Tesla stock dropped in early Monday trading as investors weigh the electric vehicle maker’s upcoming robotaxi launch against sky-high valuations. Shares fell 2.2% to $339.20 in premarket trading.
The decline comes as Tesla prepares to launch its AI-powered robotaxi service in Austin, Texas later this month. The June 12 rollout represents one of the company’s most critical milestones in recent years.
Tesla has ridden high on robotaxi expectations since its April 22 earnings call. The stock has jumped 46% since management confirmed they were on track to launch the autonomous taxi service.
The rally has pushed Tesla’s valuation to extreme levels. The company now trades at roughly 180 times estimated 2025 earnings. That’s double the 90 times multiple it carried before first-quarter results.
Those sky-high valuations prompted veteran Tesla bull Gary Black to sell his entire position. The Future Fund Active ETF cofounder dumped all his Tesla shares for the first time since 2021.
Black maintained his $310 price target but cited valuation concerns. He believes the stock is due for a pause after its recent run-up.
Weak Car Business Raises Stakes
Tesla’s core automotive business showed weakness in the first quarter. Car sales dropped 13% year-over-year while operating profit plunged 66% to $399 million.
The poor car results make a smooth robotaxi launch even more critical for Tesla. Investors are counting on the new service to unlock fresh growth opportunities.
Morgan Stanley analyst Adam Jonas remains bullish despite the challenges. He keeps an Overweight rating with a $410 price target, implying 18% upside from current levels.
Jonas points to Tesla’s manufacturing expertise and AI capabilities as key advantages. He believes these strengths are crucial as the US competes with China in robotics and artificial intelligence.
Chinese Competition Intensifies
Chinese automaker BYD recently announced major price cuts across its lineup. The reductions range from 10% to nearly 30%, with its budget Seagull model now priced under $8,000.
BYD slashes the prices of EVs by up to 34%. China continues to victimize the world by providing them goods they want at affordable prices. pic.twitter.com/S18xaBkv2m
— Richard Hanania (@RichardHanania) May 26, 2025
Jonas called the moves evidence of a “race to the bottom” in global EV pricing. The price war puts additional pressure on Tesla’s margins and market share.
China has also accelerated its humanoid robotics development. The country recently showcased robots running marathons and competing in combat sports.
Jonas wonders if the US should respond with its own robotics competition. He suggests a “Humanoid Ninja Warrior” style event to spur American innovation.
Tesla CEO Elon Musk appears to be refocusing on the company after political distractions. Investors welcomed his return to Tesla priorities as the robotaxi launch approaches.
Musk recently hinted at possible aviation ventures during an all-hands meeting. When asked about building planes, he said Tesla is “stretched pretty thin” but didn’t rule it out entirely.
Wall Street remains divided on Tesla’s prospects. The stock carries a Hold consensus rating based on 16 Buy, 10 Hold and 11 Sell recommendations.
The average analyst price target sits at $282.70, implying an 18% decline from current levels. That contrasts sharply with Morgan Stanley’s bullish $410 target.
Tesla’s robotaxi service launches June 12 in Austin, with investors watching closely for performance metrics and user adoption rates.
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