Will Tesla Stock Plunge Nearly 50%? Here's What Guggenheim Expects

Business Insider

2 days ago

Tesla (NASDAQ:TSLA) bulls are pinning hopes on the company's Robotaxi service to reignite growth at the EV maker, and on that front, CEO Elon Musk had some good news for investors recently.
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On the weekend, Musk announced on X that Tesla's Austin Robotaxi service will open to the public next month. That, says Guggenheim analyst Ronald Jewsikow, is 'quicker than we were expecting.'
Although the exact structure of the public Robotaxi network remains uncertain – likely requiring a significant increase in vehicle numbers – it represents 'another show of confidence' in the service. So far, Tesla has reported only one safety-related incident in Austin, classified as a 'safety concern' rather than an accident, which Jewsikow believes occurred on the network's first day of operation.
The public launch of the Austin Robotaxi experience represents a 'key step' in engaging a broader – and potentially more discerning – group of consumers. That said, Jewsikow thinks some skepticism among the fanbase might be warranted, although it's unlikely to materialize.
'While safety drivers will remain, and no timeline has been provided for their removal, bulls have been willing to overlook the optics of safety drivers in TSLA vehicles, and we see no reason why that would change now,' the analyst said on the matter.
And as if to reinforce confidence in Tesla's autonomous ambitions, Musk also revealed that the next-generation FSD model – version 14, boasting 10X more parameters – is expected to debut in roughly six weeks. Initially, it will be rolled out to the early access FSD community, but its progress within Tesla's employee fleet and the Robotaxi network is encouraging. For consumers, the update should reduce how often the FSD system 'nags,' and Musk hinted at numerous additional improvements beyond the parameter boost, though he hasn't yet shared specifics.
For the uninitiated, '10X parameters' refers to the number of variables the FSD model uses to learn from data. These variables adjust to make predictions more accurate. In Tesla's neural network, parameters act as influences on the neurons. For the Robotaxi system and FSD overall, a higher number of parameters allows the model to learn more complex patterns, behaviors, and tasks, and improves training.
'Perhaps most importantly for investors bullish on TSLA for the fleet of potential FSD-enabled vehicles today,' Jewsikow said, 'the 10x higher parameter count will be able to run on the current generation of FSD hardware and inference compute.'
Still, these updates haven't swayed Jewsikow's overall bearish stance. His rating on TSLA shares remains a Sell, and his $175 price target implies a one-year drop of nearly 50%. (To watch Jewsikow's track record, click here)
The Street's average price target is a more forgiving $307.23, although that figure suggests shares are overvalued by 9%. Based on a mix of 15 Holds, 14 Buys, and 8 Sells, TSLA stock claims a Hold (i.e., Neutral) consensus rating. (See TSLA stock forecast)
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