In a surprising turn of events, Tesla Inc. reported shockingly low quarterly sales figures, leaving investors questioning the true worth of Elon Musk's company. The disappointing number of cars sold in the first quarter fell far short of Wall Street's expectations, raising concerns about the future revenue and earnings growth projections for the electric vehicle giant.

Analysts are now questioning where Tesla's next phase of growth will come from, whether it be in electric vehicles or its other projects. Nicholas Colas, co-founder of DataTrek Research, noted that Tesla currently lacks clear earnings visibility or a compelling story about future earnings. As a result, the company's shares may struggle to justify a premium multiple.

The worries surrounding Tesla's growth have become so heightened that a report suggesting the cancellation of the company's low-cost electric vehicle plans, which were seen as crucial for addressing the demand problem, caused the stock to decline by more than 6%. Elon Musk swiftly refuted the news on his social media site, X, which partially reversed the decline. However, concerns remained, leading to Tesla being the heaviest weight on the S&P 500 for the session.

After the market closed, Musk further attempted to boost investor confidence by announcing that the company would unveil its "robotaxi" on August 8. While this announcement caused a rally in after-hours trading, some experts argue that focusing on a robotaxi venture at this point could be risky for Tesla. Gary Black, co-founder of Future Fund Advisors, emphasized the need for Tesla to introduce a $25,000 compact vehicle to compete with other affordable electric vehicles.

The decline in Tesla's stock this year has been substantial, with a 34% plunge making it the biggest drag on the Nasdaq 100 Index and the worst performer on the S&P 500 Index since the start of January. According to DataTrek analysis, around 76% of the company's current valuation is based on its future earnings potential. Over the past year, Tesla's shares have fallen by 11%.

Ryan Brinkman, an analyst from JPMorgan, warned that Tesla's shares could decline even further if the company fails to restore unit volume and revenue growth. The risk lies in Tesla no longer being perceived as a hyper-growth company, potentially affecting its market capitalization.

In the first quarter, Tesla sold approximately 387,000 cars, significantly missing the average analyst estimate of around 449,000 units. Consequently, profit estimates for the quarter will likely need to be revised downward, following a year of already declining profits. Analysts now predict that Tesla may not surpass its 2022 level of profitability until 2026.

Although Tesla's shares appear expensive, trading at 59 times forward earnings, the company's growth estimates for this year are the lowest among comparable tech giants such as Nvidia Corp and Amazon.com Inc. Analysts have also identified Tesla as the biggest decliner in the Bloomberg Magnificent 7 Price Return Index in 2024.

Looking ahead, analysts expect a slight decline of around 0.6% in Tesla's revenue for the first quarter. Tesla had already hinted at weakening demand last year, but the pace of deceleration caught many by surprise.

While there is a possibility of a short-term rebound in Tesla's shares as dip buyers enter the market, the longer-term recovery hinges on the company's ability to demonstrate strong growth, healthy margins, and innovative advancements. Currently, Tesla faces shrinking demand and an uncertain outlook, which directly impacts the company's high stock market valuation.

Analysts believe Tesla needs to present concrete plans to reinforce its core electric vehicle franchise to truly stem the decline in its shares. While Musk's recent announcement regarding the robotaxi garnered attention, without specific news about bolstering their core business, the impact may be temporary.

It remains a challenging task to pinpoint the bottom for Tesla's shares given the lack of a clear catalyst on the horizon, according to David Mazza, chief strategy officer at Roundhill Investments. Mazza argues that unless Tesla addresses concerns and provides concrete plans, the impact of Musk's latest announcement may be illusory.