GLJ Research has reaffirmed a Sell recommendation on Tesla Inc. with an unchanged price objective of $25.28, a figure that stands materially below the stock's quoted level of $403.58. The firm said its analysis shows the share price incorporates outcomes that are inconsistent with the realistic chances of certain high-value developments, chiefly the commercial success of Tesla's Optimus humanoid robot.
To reach its view on the potential value of the robotics program, GLJ Research reviewed independent engineering assessments, competitive data and Tesla's own disclosures. The firm concluded that even under an aggressive scenario where Optimus reaches commercial viability, the probability-weighted contribution to Tesla's valuation would represent only a small portion of the premium the market currently assigns.
GLJ Research quantified the mismatch between market pricing and plausible outcomes by estimating that the probability of the robotics outcome the market appears to be pricing in is roughly 15% to 20%. In the firm's view, current market pricing treats that outcome as near-certain, which the analysts describe as inconsistent with the team's assessment of actual likelihood.
The $25.28 target remains unchanged from GLJ Research's prior published view on Tesla. The firm also noted that analyst targets collected in InvestingPro data vary widely, ranging from $125 to $600, underscoring the spread of expectations among market participants.
Related corporate and regulatory developments
GLJ's note arrived amid several other developments connected to Elon Musk's technology ventures and the broader electric vehicle and AI ecosystems. Elon Musk's artificial intelligence company xAI has secured an agreement with the Pentagon to allow its Grok model to be used in classified military systems, making Grok the second AI model available for such sensitive applications alongside Anthropic's Claude.
Separately, xAI received a $3 billion investment from Humain, an entity backed by Saudi Arabia, which makes Humain a substantial minority shareholder in xAI. That investment is noted to occur just prior to xAI's acquisition by SpaceX, with Humain's holdings slated to convert into SpaceX shares as part of that transaction.
Tesla itself experienced a legal setback when a federal judge denied the company's attempt to overturn a $243 million verdict stemming from a fatal 2019 crash involving a Model S equipped with Autopilot. The judge said the trial evidence supported the jury's decision.
In another regulatory development with implications for autonomous vehicle expansion, New York Governor Kathy Hochul withdrew a proposal that would have permitted commercial robotaxi services to operate outside New York City, a move with direct consequences for Alphabet Inc.'s Waymo and its expansion plans.
Finally, the Trump administration announced the rescission of a Department of Energy rule known as the "fuel content factor," which had allowed automakers to account for electric vehicles at higher fuel-economy values for regulatory purposes. The removal of that incentive alters the regulatory backdrop for EV production incentives.
Summary and context
GLJ Research's retained Sell rating and steeply lower price target reflect the firm's view that the market currently overestimates the likelihood of transformative value from Tesla's Optimus program. The firm supports this assertion with external engineering reviews and an evaluation of competitive and disclosure materials, and assigns a 15% to 20% probability to the robotics outcome the market appears to be pricing in.
GLJ's stance sits alongside several legal, investment and regulatory developments affecting Musk-led companies and the EV and AI sectors more broadly, which the firm highlights as part of the broader risk environment investors should consider.
Key points
- GLJ Research reiterated a Sell rating on Tesla with an unchanged $25.28 price target, far below the stock price of $403.58.
- The firm reviewed independent engineering assessments, competitive data and Tesla disclosures and estimated the market is pricing a 15% to 20% probability for the Optimus robotics outcome.
- Recent developments include xAI's Pentagon agreement for its Grok model, a $3 billion investment in xAI by Humain, a confirmed $243 million verdict against Tesla from a fatal 2019 crash, and the rescission of the Department of Energy's "fuel content factor" rule.
Risks and uncertainties
- The primary valuation risk cited is the low probability - estimated at 15% to 20% - that Optimus will deliver the commercial outcome the market currently values, affecting investor expectations in the robotics and automotive sectors.
- Legal outcomes represent uncertainty, exemplified by the upheld $243 million verdict related to a 2019 Autopilot-equipped Model S crash, which has direct implications for automakers and insurers involved with autonomous features.
- Regulatory changes, such as the rescission of the "fuel content factor" and the withdrawal of robotaxi expansion proposals, introduce policy risk that can influence EV incentives, autonomous vehicle deployment, and competitive dynamics among technology and automotive firms.
Note: This article presents GLJ Research's published positions and the developments cited without endorsement or additional inference.