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Stocks recover with focus on profits

I can’t get enough of this story about the fall of Tesla (TSLA)!

So I’m back (see 6am post below) with a new piece of research that just came my way on Tesla from Deutsche Bank auto analyst Emmanuel Rosner. I loved this title in his Tesla section: “Clarity Needed on Company’s Future Direction.”

Perfectly said, and most others on the street agree.

Here’s what Rosner says, which goes a long way toward explaining why Tesla stock has been run over:

“Perhaps most importantly, we view the recent string of Tesla news as a potentially game-changing proposition for investors. With many questions still unanswered, it may be too early to say whether it is particularly bearish, or just neutral. As of now, it is unclear whether there will be another drivable version of the Model 2 and if so, when; how far along is robotaxi development and what is a realistic timeline for implementation in light of the significant technological and regulatory hurdles ahead? Unfortunately, if Tesla were to confirm that its renewed robotaxi focus comes at the expense of the Model 2, we believe it would introduce a significantly higher risk profile to the stock and remove a key reason why many shareholders currently own the stock. Crucially, this change in strategy would also provide some benefit if Tesla were to crack the code on full self-driving autonomy, which poses a significant technological and regulatory challenge.

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“Overall, we await clarity from Tesla on any change in strategy. If Robotaxi is accelerated without a focus or timeline change for Model 2, this could be seen as a positive signal of Tesla’s confidence in its autonomous technology and could potentially be accretive. However, if the Model 2 is pushed out or canceled, we would consider this a complete change in position, as we are concerned about Tesla’s new execution risk profile, see significant downside risk to 2026+ earnings expectations, and believe this will also the case is. The stock would have to undergo a potentially painful shift in ownership base, with investors focusing on Tesla’s EV volume dominance and cost advantage and ultimately being replaced by AI/tech investors with a significantly longer time horizon.”

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