Tesla's Stock Plummets Amid Profitability Concerns Over Robotaxi... Hits One-Month Low

Wall Street analysis suggests that it will take a considerable amount of time for the U.S. electric vehicle company Tesla to generate profits from its robo (driverless) taxi business. As concerns over profitability have intensified, Tesla's stock price has plummeted to its lowest level in the past month.

On the 11th (local time) at the New York Stock Exchange, Tesla's stock closed at $170.66 per share, down 1.80% from the previous session. This is the lowest closing price since May 10. During the trading session, Tesla's stock price dropped sharply by 3.7%, falling to around $167. It is currently showing a slight decline in after-hours trading as well.

This downward trend is analyzed to be due to recent profitability concerns expressed by Wall Street regarding Tesla's robo-taxi business, which the company has been pushing forward. Facing a global slowdown in electric vehicle demand, Tesla has responded with price cuts but has recently shifted its focus by putting more effort into the robo-taxi business.

Ryan Brinkman, an analyst at JP Morgan, pointed out in an investor memo on the same day that investors expecting Tesla to quickly build a business centered on robo-taxis may ultimately be disappointed. He stated, "We expect Tesla to showcase the robo-taxi concept and reveal more about the business model on August 8," adding, "We do not anticipate meaningful profit generation for several years."

Brinkman particularly explained that this outlook is based on a recent meeting with Tesla's IR director. At that time, Tesla's IR executive suggested that it could take several years to produce robo-taxis on the next-generation vehicle platform, Brinkman reported. Bloomberg News pointed out, "Tesla, which has shifted its direction to robo-taxis, has yet to build much of the infrastructure needed for autonomous driving services and has not even obtained regulatory approval for testing."

JP Morgan has set a target price of $115 for Tesla's stock and assigned a sell rating. Tesla's stock price has already fallen more than 30% since the beginning of the year.

[Image source=AP Yonhap News]

Additionally, the upcoming Tesla shareholders' meeting on the 13th, where a $56 billion compensation plan for CEO Elon Musk is likely to be rejected, is also weighing on the stock price. Analyst Ben Callo of Baird stated in an investor memo that despite recent controversies, he expects the compensation plan to pass but warned, "If it is rejected, uncertainty will increase, potentially leading to a decline in the stock price." He added that shareholder approval will be a key milestone for Tesla's stock.