.July 12, 2024 10:03 AM

Tesla’s shares dropped over 8% after a two-month delay in unveiling its Robotaxi, now set for October. UBS downgraded Tesla from Neutral to Sell, citing deteriorating expectations for its core auto business.

UBS estimated that over $500 billion of Tesla’s current valuation is due to future growth initiatives, requiring a future value of $1 trillion to justify current stock levels. An even larger growth opportunity would be needed for a Buy rating.

Tesla’s investment in AI is progressing but costly, with potential slowdowns and long-term payoffs. Market enthusiasm for AI could impact Tesla’s valuation.

Following a strong second-quarter report, Tesla’s stock rallied for 11 days but has now fallen back into negative territory for 2024. The company faces challenges with layoffs, declining sales, and increased competition in China.