Citizens Research began coverage of Tesla with a Market Perform rating, expressing concern that market valuation currently reflects optimistic, near-term assumptions for the rollouts of Optimus and Robotaxi.
Analyst Andrew Boone, in the initiating note, said the firm is launching coverage because of the potential of what it terms "physical AI," likening the opportunity to the way artificial intelligence is reshaping knowledge work. Citizens pointed to a suite of Tesla assets that support progress in that direction - including advanced autonomy models, in-house silicon, manufacturing capabilities, modern battery technology and what the firm described as CEO Elon Musk's engineering prowess.
Despite acknowledging those strengths, Citizens emphasized that the broader vision is unlikely to come together quickly. The firm warned that Optimus is set to confront "a new level of production complexity," which it expects will result in delays and higher spending. Citizens characterized Tesla as being at the outset of an Optimus investment cycle, implying a period of elevated capital and operational commitment before returns might materialize.
On the Robotaxi initiative, Citizens expressed skepticism about Tesla's reliance on a camera-only approach. The research house questioned whether a system that uses only cameras can match the effectiveness of autonomous vehicle platforms that combine LiDAR, radar and cameras for inputs and pair them with powerful supercomputing hardware to run driving algorithms. Citizens said it anticipates "significantly more incidents than current leading AV driving systems," and warned that such incidents could produce liability concerns or force temporary suspensions of service.
Reflecting a more conservative near-term outlook, Citizens reported that its revenue projections for Tesla are below consensus: its 2027 estimate is 4% beneath consensus and its 2028 estimate is 12% below consensus.
Citizens noted that Tesla shares closed at $394.06 on Wednesday. Using that price, the firm calculated an implied trading multiple of 70.2 times and a 10.8 times multiple on its 2028 estimated EV/EBITDA and EV/Revenue metrics, respectively. Those multiples represent a premium relative to auto and energy peers, a premium Citizens described as warranted by Tesla's optionality but nonetheless reflective of elevated expectations.
Overall, Citizens' initiation combines recognition of Tesla's technical and manufacturing endowments with a cautionary stance on the timeline, costs and potential safety and liability challenges tied to Optimus and Robotaxi developments.