Tesla Robotaxi Sighting in Austin Fails to Alter Bearish Valuation Thesis

What happened

A fully autonomous Tesla vehicle was spotted in Austin, Texas, highlighting ongoing testing for the company's robotaxi service. This development comes amidst a 'STRONG SELL' rating in the latest DeepValue master report, which cites deteriorating auto margins and revenue declines. The report emphasizes that Tesla's valuation at ~267x earnings already prices in significant autonomy success, making such sightings insufficient to justify the premium. Regulatory approvals and scaling remain major hurdles, with auto gross margin down to 17% in Q3 2025 and intense competition eroding market share. Consequently, this event does not materially change the investment case unless it leads to clear regulatory milestones or improved financial metrics.

Implication

The sighting may briefly lift sentiment, but it has no immediate impact on Tesla's pressured earnings or cash flow, which are down year-over-year. Valuation remains extremely stretched, requiring massive future autonomy growth to justify the current price, a scenario fraught with regulatory and competitive risks. Regulatory hurdles for full self-driving approval persist, and competition from Chinese and legacy OEMs is intensifying, threatening Tesla's auto margins. Tesla's higher-margin energy business is growing but too small to offset auto segment challenges at the stock's premium valuation. Investors should focus on upcoming quarterly margins, FSD subscription trends, and regulatory developments rather than anecdotal progress reports.

Thesis delta

The sighting of an autonomous Tesla in Austin represents incremental progress but does not shift the bearish thesis from the master report. Core issues of extreme valuation multiples and deteriorating fundamentals, such as auto margin compression, remain unchanged. A material shift would require evidence of regulator-approved scaling for robotaxis or sustained improvement in automotive profitability.