Stock Market Today: Earnings Concerns, Stocks Rebounding

The story of Tesla (TSLA) hitting rock bottom makes me want to stop!

So, here I am again (see 6:00 AM post below) with the latest research on Tesla from Deutsche Bank automotive analyst Emmanuel Rosner. I like the title of his section on Tesla: "The Need for Clarity on the Company's Future".

Very well said, and most people on the street would agree.

Here's what Rossner said, which goes a long way toward explaining why Tesla's stock is getting crushed:

"Perhaps most importantly, we believe that Tesla's recent string of news could change investors' minds. With so many questions still unanswered, it's probably too early to be particularly bearish or neutral. So far, we don't know whether and if so when a driver-friendly version of the Model 2 will be launched, how far along the robot taxi is, or what the realistic deployment schedule is given the large number of technical and regulatory hurdles facing the vehicle. We expect Tesla to comment on this during its upcoming earnings call. Unfortunately, if Tesla confirms that its renewed focus on robo-rental vehicles comes at the expense of the Model 2, we believe that this will significantly increase the risk to the stock, eliminating one of the key reasons why many shareholders currently hold the stock. More critically, this change in strategy would also make Tesla's ability to achieve fully autonomous, unmanned driving a major technical and regulatory challenge.

In total, we are waiting for Tesla to make a clear change in strategy. If Robotaxi is being accelerated and there is no change in the focus or timeline for the Model 2, this could be taken as a positive sign of Tesla's confidence in its autonomous technology, and potentially an increase in early-year expectations. However, if the Model 2 is delayed or canceled, we believe this would radically change Tesla's investment strategy, as we are concerned about Tesla's new execution risk profile, see significant downside risk to earnings estimates beyond 2026, and believe the stock will need to undergo a potentially painful change in ownership base, and investors focused on Tesla's EV sales dominance and cost advantage may give up and ultimately be priced out of the market by time. Investors focused on Tesla's electric car sales dominance and cost advantage may give up and eventually be replaced by AI/technology investors with longer time horizons.