Tesla NASDAQ:TSLA received a more cautious endorsement from Stifel after analyst Stephen Gengaro cut his Street-high price target to $491 from $508 while maintaining a Buy rating. The revision keeps substantial upside intact, but it also exposes the central risk facing Tesla investors: today's valuation increasingly depends on Full Self-Driving adoption and Robotaxi economics that remain only partially proven.
Tesla shares rose about 2.2% to $318.18 on Monday, placing the revised target roughly 54% above the latest price. The stock's reaction suggests investors still see value in Tesla's autonomy push despite the lower target and a difficult post-earnings backdrop.
Tesla delivered a record 480,126 vehicles during the second quarter, up 25% year over year, while active FSD subscriptions jumped 56% to 1.48 million. Cybercab production also began, and Tesla said its Robotaxi service was operating in seven major metropolitan areas. Those metrics provide early evidence that the autonomy ecosystem is expanding.
However, the financial burden is rising faster than software profits. Revenue climbed 26% to $28.24 billion, but total gross margin fell sequentially to 16.8%, operating income dropped 57% to $398 million and adjusted EBITDA declined 4% to $3.27 billion. Capital expenditures surged 142% to $5.79 billion, pushing free cash flow to negative $1.09 billion.
Investor Takeaway On Tesla Stock
Investors should focus on whether FSD subscription growth translates into higher software revenue per vehicle, not simply more users. Robotaxi expansion must also produce measurable improvements in paid miles, utilization, revenue and operating costs.
A faster city rollout, rising FSD penetration and improving automotive margins would strengthen Stifel's $491 case. Continued cash burn, regulatory delays or weak Robotaxi economics would undermine it. The decisive question is whether Tesla's autonomy businesses can begin funding the heavy investment required to scale them.