Tesla: No Room For Disappointment

Summary

• I rate Tesla a sell due to high expectations for robotaxi/self-driving and a sharp rebound in auto sales, while valuation is aggressive, leaving little room for disappointment.
• Tesla's valuation is stretched at 62x P/CE YE26 estimates, with much of the long-term growth dependent on unproven self-driving segment.
• Auto sales should remain the core driver, expected to grow 22% in 2026. Tesla has room to increase its market share, but margin expansion faces execution risk.
• Ride-hail stocks like Uber and Lyft offer better value with less execution risk, making them more attractive alternatives to Tesla at current prices.

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Introduction

I recently covered Uber Technologies (UBER) and Lyft (LYFT) with a focus on the impact and opportunity that autonomous vehicles (AV) technology could present to the ride-hail companies, which I

Analyst’s Disclosure:I/we have a beneficial long position in the shares of UBER, LYFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.