Tesla shares rebound despite an NHTSA probe into about 1.2 million vehicles as investors weigh weak second-quarter profitability against progress in FSD, robotaxi development and broader AI ambitions.
Stifel Nicolaus cut its Tesla price target to $491 from $508 while maintaining a Buy rating, even as Tesla shares rose for a third straight session on Monday, closing up 3.5% at $322.08 despite a preliminary National Highway Traffic Safety Administration, or NHTSA, probe into about 1.2 million vehicles over suspension complaints. Analyst Stephen Gengaro said Tesla's long-term valuation still depends heavily on broader Full Self-Driving, or FSD, adoption and successful robotaxi economics, despite record second-quarter revenue of $28.24 billion and record deliveries of 480,126 vehicles. The quarter also showed weaker profitability and cash generation, with gross margin at 16.8%, operating income around $398 million, adjusted EBITDA of $3.27 billion, capital expenditures up 142% to $5.79 billion and free cash flow at negative $1.09 billion. Investors appear increasingly focused on Tesla's AI-related initiatives, including FSD, robotaxis and Optimus, while Wall Street remains split, with a Hold consensus despite Stifel's still-bullish stance.