UBS has released a report saying that Tesla (TSLA.US) is not priced on its electric cars or even energy, but on autonomy and artificial intelligence (AI). Since the company is working on AI initiatives including robo-taxi and Optimus humanoid robots, UBS believes that any payoff from such initiatives is further out, and thus on earnings updates, the realities of the business fall back to auto. It further believes that only about US$74 of Tesla's share price is attributed to the core auto and energy businesses, and thus there is already an expensive option built in to TSLA shares.
Over the near term, UBS sees more downside to the stock if/when confidence in these initiatives wavers, against the upside from likely only incremental data points supporting the LT bull case. Robo-taxi day could be a sell-the-news event. UBS maintained a Sell rating on Tesla with a TP of US$197.
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