Fundamentals over hype.

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

CFRA analyst Garrett Nelson likened the event to “watching a movie with a lot of plot twists and special effects, and at the end, you're walking out scratching your head.”

Safe to say analysts “scratching their heads” was probably not the reaction Musk was hoping for when showing off the Cybercab and Robovan concepts. Now, the big issue for investors is reevaluating Tesla’s stock price.

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

Nelson, who had been a longtime bull on Tesla, warned Friday’s drop “could be” just the beginning as Wall Street reassesses.

“There is an increasing disconnect between the stock’s lofty valuation and the reality that Tesla’s earnings growth has hit a wall,” he tells me, noting that intermediate-term growth drivers are “unclear.”

In a note to clients, Bernstein’s Toni Sacconaghi reiterated his belief that Tesla’s valuation is disconnected from fundamentals, writing the robotaxi event was “short on immediate deliverables or incremental revenue drivers.”

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

As my colleague Akiko Fujita wrote, robotaxis are a costly venture, and may be years away from becoming profitable.

The absence of near-term catalysts comes at an already challenging time for Tesla. Lackluster demand and increased EV competition from the likes of GM have pressured sales and margins in recent quarters, and it’s a trend that pros warn is unlikely to change anytime soon.

In Q2, the company reported operating margins of 6.3%, compared to 14.6% just two years earlier.

Guggenheim’s Ron Jewsikow, who sees fair value around $153 per share, told me that post-robotaxi event, investors will “return to focusing on the fundamentals of the business,” which he characterized as “quite poor.”

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

With its shares falling 9% on Friday and down over 17% in the past year, it’s safe to say Tesla has a lot to prove when it comes to the fundamentals. Its next big test will be its third-quarter earnings, scheduled for after the bell on October 23.

Will it be more hype than fundamentals? Buckle up!