logo
Investor Ross Gerber is even more bearish on Tesla after Trump's tax bill. Here's how much further he thinks the stock could fall.

Investor Ross Gerber is even more bearish on Tesla after Trump's tax bill. Here's how much further he thinks the stock could fall.

Yahoo15-07-2025
Ross Gerber has been calling for a painful drop in Tesla stock all year.
The longtime Tesla investor sees the elimination of the EV tax credit as a new headwind.
He thinks the stock should be trading more in line with the valuation of other Magnificent 7 names.
One of the market's most vocal Tesla bears doesn't see a lot to get excited about for Elon Musk's carmaker through now and the end of the year.
Ross Gerber, CEO and president of Gerber Kawasaki Wealth and Investment Management, has strongly critiqued the company and its leadership under Musk this year. He accurately predicted a crash in the stock price earlier in 2025 as sales stalled and investors grew dismayed with the CEO's work in politics.
Tesla stock has recovered its steepest losses, but it's still down 17% year-to-date — and Gerber sees it declining even further by year-end.
Geber told Business Insider that he sees the stock ending the year at roughly $200 per share, implying potential downside of roughly 36% from Monday's price of around $314.
Once a prominent shareholder and Musk backer, Gerber has substantially scaled back his Tesla position, and has been clear about why.
With Musk's relationship with Donald Trump on the rocks and lingering brand damage from his foray into politics during his stint at the Department of Government Efficiency, Gerber told Business Insider that he now sees another reason to be bearish on the stock.
Gerber said that the One Big Beautiful Bill Act that Trump signed on July 4 will negatively impact the company. He recalled initially describing it as the "Tesla enrichment act," highlighting how much changed with the elimination of EV tax credits.
The bill ends many years of government support for electric cars much earlier than expected. The $7,500 tax credit, which was a big incentive for drivers to go electric, will sunset on September 30.
"Now there's nothing good for Tesla in this bill," Gerber said. "It's a serious step back for them to have to deal with this."
Musk has also spoken out against the bill, directly criticizing Trump for it and describing it as a "disgusting abomination" because of its potential to increase the deficit. The president responded by claiming that the Tesla CEO may be receiving "more subsidy than any human being in history."
Their public disagreement sent Tesla stock tumbling, with Gerber describing the feud as a "disaster for Tesla stock."
In addition to the challenges created by eliminating a lucrative consumer incentive, he also highlighted potential problems with Tesla's hugely anticipated robotaxi service, something Musk—and Wall Street—have staked the company's future on.
Gerber has instead praised Waymo, Tesla's primary rival in the autonomous driving space. In his view, Waymo's work with Lidar and digital mapping gives it a clear advantage over Tesla.
"Tesla should just accept that and do what they need to do to get the service to work," he stated. "But as of now, nobody has full self-driving software that actually is consistent enough to drive across a real town."
Between those challenges and the revenue loss that could stem from the end of the EV tax credit, Gerber predicts more pain for the stock.
"I think the stock is way overvalued and should trade in line with its Mag 7 peers," he said.
Tesla was trading at almost 170x earnings on Monday. For comparison, Nvidia stock was trading at 54x earnings.
Based on his opinion that Tesla should be valued more in line with other mega-cap tech names, Gerber said the stock should be trading around $150, "plus whatever fantastical valuation you want to put on taxis and robots."
Read the original article on Business Insider
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

The 5 biggest takeaways from Tesla's Q2 earnings call
The 5 biggest takeaways from Tesla's Q2 earnings call

Business Insider

time8 minutes ago

  • Business Insider

The 5 biggest takeaways from Tesla's Q2 earnings call

Things could get worse before they get better, at least according to Tesla's CEO, Elon Musk. Tesla's second-quarter earnings showed its steepest year-over-year revenue decline in at least a decade, below already grim Wall Street estimates. Tesla shares are trading down more than 4% in the after-hours following the earnings call. Here are the five biggest takeaways from Tesla's call and how analysts are taking it: 1. Brace yourself for the next few quarters The CEO told analysts Wednesday that the EV maker is heading into a "weird transition period," which the earnings report attributed to "shifting tariffs, unclear impacts from changes to fiscal policy, and political sentiment." "Does that mean like we could have a few rough quarters? Yeah, we probably could have a few rough quarters," Musk said on the call with analysts. Though he added that the bumpiness isn't guaranteed, he said the company is navigating waning EV incentives and evolving autonomous vehicle regulations. "I think Tesla's economics will be very compelling by the end of next year," Musk said. Thomas Monteiro, senior analyst at wrote in a note that there are reasons to be optimistic about Tesla as the company works to gain ground in India and China. "Although still far from what fundamentals would suggest for a trillion-dollar company," wrote Monteiro, "Tesla's latest numbers do spark some optimism, indicating that the worst is likely behind it — at least in terms of the core auto business." 2. A not-so-Robo taxi expansion? Tesla executives provided some more details on Robotaxi 's progress, including a quasi-robotaxi expansion planned for the San Francisco Bay Area. Ashok Elluswamy, Tesla's VP of AI software, said during the call that the company is testing in other US cities and that Tesla plans to "launch" Robotaxi in the San Francisco Bay Area, "with a person in the driver's seat." Elluswamy said having a driver behind the wheel will help expedite the expansion process as the company awaits regulatory approval in California. With a driver in the seat, Tesla's Robotaxi arrival in the region would look similar to Waymo's early days in 2018. Currently, human safety monitors are riding along in the front passenger seat of Tesla's Robotaxis in Austin, and the service is only available to a select few Tesla influencers and investors. There were also some bold but broad timelines provided for other areas of Robotaxi's progress. Musk said Tesla plans to expand the service in a "couple of weeks or so" as it continues its limited operation in Austin. Cybercab, the purpose-built robotaxi that has no steering wheel or pedals, is slated for volume production in 2026. Tesla owners will be able to add their personal Teslas to the Robotaxi fleet by "next year," although Musk said, "We don't want to jump the gun." The CEO said he expects Tesla's autonomous ride-hailing service to be available to "probably half of the population of the US by the end of the year," pending government approval. Musk has missed deadlines for previously announced Robotaxi timelines. 3. The cheaper Tesla will be a Model Y lookalike Giving investors a glimpse of what the highly anticipated "more affordable" model would look like, Musk says it will look "like a Model Y." He later added that the company anticipates the vehicle to be available to the public in the fourth quarter. "We continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025," Tesla wrote in the earnings release. The idea of a Tesla that's more attainable for the household budget was first floated in 2020 at Tesla's " Battery Day." Musk mapped out a $25,000 electric car, nicknamed the " Model 2," with a target of launching within three years, but that deadline passed without delivery. 4. Musk is concerned about his shares in the company Musk is afraid he "can easily be ousted by activist shareholders" if his shares in Tesla decrease, alongside his control over the company. "I think my control over Tesla should be enough to ensure that it goes in a good direction," Musk says. "But not so much control that I can't be thrown out if I go crazy." This is not a new concern for Musk. "I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control," he posted on X in January of 2024. "Enough to be influential, but not so much that I can't be overturned." The renewed sentiment comes at a time when Musk's political involvement is unpopular among shareholders, who wish for him to focus on Tesla. The latest Electric Vehicle Intelligence Report showed that 51% of direct Tesla shareholders prefer that he spend more time on the company, while just 12% would like to see him spend more time on the government. 5. Tesla declines to talk about xAI Vaibhav Taneja, Tesla's chief financial officer, didn't want to talk about the idea of Tesla investing in Musk's other company, xAI, saying the earnings call is "not the forum" to address the issue. Musk, on the other hand, said that "shareholders are welcome to put forward any shareholder proposals that they'd like." "I recently encouraged that, and then have shareholders vote and will act in accordance with the shareholder wishes," Musk said. Musk had previously opposed the idea of merging xAI with Tesla, but wants to put investing in the AI company to a shareholder vote in November. Kevin Thomas, CEO of Shareholder Association for Research and Education, previously told BI that Musk is creating "a nightmare" from "a governance point of view." "If this were a merger decision, at least we'd be looking at a single entity, where that company's CEO could justifiably decide where to allocate resources between its divisions," said Thomas. "Is it too much to ask Tesla's CEO to work for Tesla first and foremost?"

Elon Musk says Tesla will start adding vehicles it doesn't directly own into its robotaxi network next year
Elon Musk says Tesla will start adding vehicles it doesn't directly own into its robotaxi network next year

Yahoo

time34 minutes ago

  • Yahoo

Elon Musk says Tesla will start adding vehicles it doesn't directly own into its robotaxi network next year

Owners of Tesla cars will be able to add their vehicles to the company's robotaxi network sometime next year, Elon Musk said on the company's quarterly earnings call on Wednesday, potentially allowing hundreds of thousands of customers to make money by remotely renting out their cars as self-driving cabs. 'I'd say confidently next year,' Musk, the CEO of Tesla, said on the call. 'I'm not sure when next year, but confidently next year.' The move would mark a major expansion of the company's robotaxi network, which officially launched last month in Austin with just a handful of self-driving vehicles that Tesla directly owns and operates. Tesla is trying to catch up with industry leader Waymo, whose fleet of self-driving robotaxis ferry paying customers in numerous U.S. cities. Musk noted that the Tesla team hasn't 'thought hard' about the details of adding cars that it doesn't directly own to the robotaxi service, and was still primarily focused on safety in Austin, where it debuted operations in June with a safety driver in the passenger seat. 'We need to make sure it works when the vehicles are fully under our control,' he said. Tesla reported that revenue in its most recent quarter fell 12% year-over-year to $22.5 billion, the EV company's worst performance in at least a decade. The company ascribed the decline to an ongoing slump in vehicle deliveries and falling prices (trends that were not helped by Musk's involvement in partisan politics) as well as declining revenue from environmental credits. Musk has suggested that Tesla would eventually incorporate Tesla EVs owned by its customers into the broader robotaxi network for several months now, raising the idea that individuals would be able to rent out their own cars and eventually even manage their own fleets. Besides the technological aspect of such a plan, it's unclear how regulatory and liability issues might come into play. And, as of now, Tesla still has yet to fully remove safety drivers from the vehicles that it owns and operates on its fledgling robotaxi service. For its initial Austin rollout, Tesla has had someone sitting in the passenger seat at all times. Tesla has gradually expanded its service radius in Austin (a map shared by Tesla online last week depicts the latest robotaxi service area in a distinctly phallic shape) and Musk said the company plans to expand it further in a couple weeks time. While Tesla's robotaxi service is currently only available to invitees including social media influencers who regularly post about the company, and not the general public, Musk laid out lofty expansion plans for the robotaxi service on Wednesday's earnings call, saying that Tesla was seeking regulatory permission to launch in the Bay Area, Nevada, Arizona, and Florida. 'As soon as we get the approvals and we prove our safety, then we'll be launching autonomous ride hailing in most of the country, and I think we'll probably have autonomous ride hailing in probably half the population of the U.S. by the end of the year,' he said. So far, there have been no major safety episodes in Austin since the launch of the robotaxi service, Tesla's CFO said on the call. Teslas have driven 7,000 autonomous miles thus far since June, he said. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

The 'Stakes Are High' for Big Tech Earnings
The 'Stakes Are High' for Big Tech Earnings

Yahoo

time43 minutes ago

  • Yahoo

The 'Stakes Are High' for Big Tech Earnings

It's Big Tech's turn to turn in its numbers. A pair of Magnificent Seven companies are set to report their latest financial results this week, with Alphabet (GOOGL) and Tesla (TSLA) due to report earnings after the closing bell Wednesday; another standout U.S. tech firm, chipmaker Intel (INTC), is set to release results late Thursday. The reports will jump-start the tech earnings season following Netflix's (NFLX) results last week. The big picture for S&P 500 company earnings is largely a question of the group of tech stalwarts' health. The 'Mag 7' is expected to turn year-over-year earnings growth of more than 14%, FactSet said Monday, compared with 3.4% for the rest of the companies in the index. The stock market's recent performance suggests that investors bet they can deliver. The tech-focused Nasdaq Composite last week notched closing records in all five trading sessions, then rose further Monday. Renewed interest in trading acronyms and meme stocks may also signal enthusiasm for stocks broadly. Mag 7 Stocks Have Lagged the Broader Market There are, however, signs of caution among investors regarding chasing stocks further: The Roundhill Magnificent Seven ETF (MAGS) is in the green this year, but it has underperformed the S&P 500 even after a strong close to the first half. Only three Mag 7 stocks—Nvidia (NVDA), Microsoft (MSFT) and Meta (META)—are beating the S&P 500 year-to-date. 'Anyone investing in the S&P 500 index today is basically making a bet on the Magnificent 7 stocks propelling even higher,' Apollo Chief Economist Torsten Slok wrote earlier this month. 'The stakes are high for tech earnings season," said State Street Investment Management Chief Investment Strategist Michael Arone, and this week will "set the tone." Tech companies account for more than a third of S&P 500 earnings, he said, making their results 'critically important' to sustaining stocks' strengths. It's still early in the reporting season. Fifty-nine S&P 500 companies, representing about a fifth of index earnings, had reported as of last week, according to a Bank of America analysis. More than fourth-fifts of the companies to report, FactSet said, have turned in earnings above Wall Street's forecasts; a similar percentage has done so for revenues. Pressure on Big Tech to Top Expectations As for this week's Mag 7 reporters: At Tesla, shares of which were down about 19% this year through Monday's close, options traders expect the stock to move more after earnings than it did after the first-quarter results arrived. Alphabet's shares are little changed in 2025, and investors will watch its results for signs of the health and benefits of AI infrastructure spending, among other things. Some market watchers say that the setup may put particular pressure on tech stocks to outperform expectations. Netflix may be an example: While its results were generally positive, investors appeared to be looking for more, and its stock fell Friday before recovering a bit yesterday. 'Tech stocks' lofty prices and sky-high valuations will make it critically important they handily beat earnings estimates and deliver positive outlooks for the remainder of the year," Arone said. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store