The Massive Valuation Risk Keeping Tesla Stock from Breaking Out

Dow Jones20:38

In Samuel Beckett's Waiting for Godot, two characters, Vladimir and Estragon, spend most of the play waiting for a mysterious Godot, who doesn't arrive.

That's a little like the situation Tesla investors find themselves in. They are waiting for AI earnings. Shares of the electric-vehicle maker are bouncing around while they wait.

Tesla stock was little changed in premarket trading at $406.58, while S&P 500 and Dow Jones Industrial Average futures were flat and up 0.2%, respectively.

Coming into Friday, shares traded as high as $420 this week, boosted by news that the company launched an unsupervised robo-taxi service in Miami. Gains faded, however, leaving Tesla stock in the high $300s, where it's spent a lot of time lately.

Tesla launched its robo-taxi business in Austin, Texas, in June 2025. Scaling has been slow, however. GLJ analyst Gordon Johnson noted in a Thursday report that only a handful of self-driving cabs are in operation.

Tesla, for instance, has registered about 100 robo-taxis in Texas. Alphabet's Waymo has closer to 600 in the state.

Failure to scale the service is a big reason the stock has been stuck. Coming into Friday trading, Tesla stock was down about 10% this year.

Despite the drop, shares have been all over the place, typically for Tesla. Over the past 12 months, the stock has traded as high as almost $500 per share and as low as just under $300 per share.

One thing that drives the volatility is valuation. Tesla stock trades at about 210 times estimated 2026 earnings. The S&P 500 trades for closer to 21 times. The rest of the Magnificent Seven trade for about 26 times.

Tesla's valuation reflects considerable optimism about Tesla's AI efforts, which include AI-trained robo-taxis.

When taxis in more cities enter service, Tesla stock should get a boost. For now, investors are waiting, just like Vladimir and Estragon.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

 

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July 10, 2026 08:38 ET (12:38 GMT)

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