Fundamentals over hype.

Indeed, that’s the lesson for Tesla (TSLA) investors after the EV maker’s disappointing robotaxi event last week exposed a discrepancy between the stock’s lofty valuation and reality.

A lack of details around the rollout plan and regulatory approval, plus the lack of a more affordable mainstream EV, left Wall Street wanting more.

CFRA analyst Garrett Nelson likened the event to “watching a movie with lots of plot twists and special effects, and at the end you walk out shaking your head.”

It’s safe to say that analysts’ “scratching their heads” probably wasn’t the reaction Musk was hoping for when he pitched the Cybercab and Robovan concepts. The big issue for investors now is reevaluating Tesla’s stock price.

More than $60 billion was wiped off Tesla’s valuation in a selloff on Friday, a sharp reversal from the stock’s recent momentum. Shares had risen more than 70% since Musk started touting AI in April. The rally brought Tesla’s market value before the robotaxi announcement to more than $760 billion – more than 14 times the market cap of GM (GM) and almost 18 times that of Ford (F).

Nelson, a longtime bully for Tesla, warned that Friday’s decline could be “just” the beginning as Wall Street reassesses the stock.

“There has been a widening gap between the stock’s high valuation and the reality that Tesla’s earnings growth has hit a wall,” he says, noting that medium-term growth drivers are “unclear.”

In a letter to customers, Bernstein’s Toni Sacconaghi reiterated his belief that Tesla’s valuation is disconnected from fundamentals. He wrote that the robotaxi event “lacked any immediate results or incremental revenue drivers.”

Sacconaghi estimated that Tesla’s auto industry is worth around $200 billion, suggesting that nearly $600 billion of its valuation depends on less proven ventures, including Full Self Driving (FSD), robotaxis and humanoid robots.

As my colleague Akiko Fujita wrote, robotaxis are a costly endeavor, and it may take years before they become profitable.

The lack of near-term catalysts comes at an already challenging time for Tesla. Lack of demand and increased competition in electric cars from the likes of GM have put pressure on sales and margins in recent quarters, and it’s a trend that professionals say isn’t likely to change anytime soon.

In the second quarter, the company reported operating margins of 6.3%, compared to 14.6% just two years earlier.

Guggenheim’s Ron Jewishikow, who sees a fair value of around $153 per share, told me that after the robotaxi, investors will “refocus on the fundamentals of the company,” which he described as “pretty bad.”

The story continues

“A company trading at 100 times next year’s earnings, with little to no free cash flow, is really difficult to insure,” he added.

Shares of Tesla recovered somewhat in premarket trading Monday, up about 2%. But considering shares are down 9% on Friday and are down more than 17% in the past year, it’s safe to say Tesla has a lot to prove when it comes to its fundamentals. The next big test will be the third quarter results, scheduled for after the bell on October 23.

Will it be more of a hype than a fundamental issue? Buckle up!

Seana Smith is an anchor at Yahoo Finance. Follow Smit on Twitter @SeanaNSsmith. Tips about deals, mergers, activist situations or something else? Email [email protected].

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