Neuberger Berman's Steve Eisman says Tesla's 220-times 2026 earnings multiple only makes sense if investors believe its robotaxi business will conquer the world, and he is skeptical. Over the past year General Motors has returned 43.13% against Tesla's -14.81%, even as Tesla expands its robotaxi service and free cash flow turns negative.
Steve Eisman, the Neuberger Berman senior portfolio manager made famous by his bet against subprime mortgages, says Tesla's valuation only holds up under one assumption: that its robotaxi business will dominate globally. His conclusion: "the people who were short were right on the fundamentals."
Eisman's fundamentals case
Tesla trades at 220 times 2026 consensus earnings of $1.66 a share, versus 6.5 times for GM. Tesla's EPS has fallen 59% from its 2022 peak of $4.07. The company also carries a P/E of 381, a price-to-book of 17.6, and free cash flow that turned negative $1.09 billion in Q2 2026, with return on equity of just 4.9%.
In its Q2 2026 filing, Tesla posted revenue of $28.24 billion, up 25.5% year over year, but non-GAAP EPS of $0.33 missed the $0.54 estimate by 38.5%, while operating income fell 56.9% to $398 million. Eisman also noted Tesla's stock fell 6% on the day of its robotaxi event, pointing to Elon Musk's history of overpromising.
The robotaxi bet Tesla is selling
Tesla is still pushing forward on autonomy. The company has expanded unsupervised robotaxi service to seven U.S. metros, including Austin, Dallas, Houston, Miami, Orlando, and Tampa. Active FSD subscriptions reached 1.48 million, up 56% year over year. Tesla's CFO said 2026 capital expenditure would exceed $25 billion and keep growing for the next two to three years, with debt facilities lined up to borrow as much as $30 billion.
GM's quieter outperformance
While Tesla chases robotaxi scale, GM has been the better stock. GM has returned 43.13% over the past year against Tesla's -14.81%, with Tesla down 19.33% year-to-date. GM's fundamentals back the move: the automaker posted Q2 2026 adjusted EPS of $3.57, beating estimates by 12.1% for a fifth consecutive beat. GM also raised full-year guidance to adjusted EBIT of $14.0 billion to $16.0 billion, and trades at a P/E of 29 with a free cash flow yield of 14.1%.
Eisman's skepticism rests on one question: whether Tesla's robotaxi network can compound fast enough to justify a multiple roughly 13 times GM's on 2026 numbers. The cheap automaker has been the better stock.
Source: 24/7 Wall St.
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