The Big-Picture Opportunity
Tesla likes to promote its vehicles’ fast zero-to-60 times, but the company’s growth might be more impressive than any number its cars can put up. Tesla has gone from a niche manufacturer in 2010 delivering about 1,500 Roadsters annually to nearly 500,000 vehicle deliveries last year.
But Tesla since its early days has always been more than just another automaker, branching out over the years into renewable energy, power storage, personal and commercial trucks, and autonomous driving. And the company has built its business without having to spend on advertising, an unheard-of development in the auto industry that speaks to the power of the Tesla brand and consumer loyalty.
CEO Elon Musk is a true visionary, and few leaders are as invested in their own company the way he is. Musk owns about 22.4% of Tesla’s shares and is the guiding force behind the expansion of Tesla’s auto business globally and its broadening reach into new areas. Musk has never been afraid to push boundaries and dream big, setting ambitious goals and then pushing his company to reach them.
Autonomous driving is just the latest example of this. Musk envisions a world where Tesla cars are profit centers, and not a depreciating asset, operating as robotaxis shuttling passengers to their destination instead of simply sitting in a lot when their owners don’t need them. Tesla is developing its own “Dojo” supercomputer to help its artificial intelligence (AI) software grow its autonomous know-how.
On a recent earnings call, Musk said: “I think long term, people will think of Tesla as much as an AI robotics company as we are a car company or an energy company,” a statement that today sounds as unbelievable as the idea of Tesla selling 500,000 vehicles in a year must have sounded a decade ago.
Why Tesla Is a Foundational Stock
One of the things Tesla detractors have consistently gotten wrong is they have underestimated the company’s ability to raise capital and manage its balance sheet. Tesla is still a growing company, adding capacity in the form of new factories on three continents. That requires billions in capital, and Tesla has a proven track record of managing its balance sheet and supplementing it with stock sales and debt issuances as needed.
As noted above, Musk is the textbook definition of invested and visionary management, and the company is at the forefront of an electric revolution in the automotive industry that provides tailwinds into the next decade. Tesla’s loyal following is one of the best sustainable competitive advantages in the auto business, and it provides a ready-made list of potential customers as the company continues to expand into new areas.
Tesla’s valuation, though down considerably from its highs, remains lofty compared to other automakers. But the company’s potential market opportunity is much bigger than just vehicles, and assuming Musk is able to follow through on his vision to make Tesla a leader in AI and renewable energy, the valuation begins to look much more reasonable.
Potential Business Risks
Tesla might have pioneered the modern electric vehicle, but there is no shortage of other automakers vying for its throne. That includes start-ups both in the United States and China that are aiming to be “the next Tesla,” as well as new competition from established automakers like General Motors (NYSE: GM), Ford Motor Company (NYSE: F), and Volkswagen (OTC: VWAGY).
This is going to be a huge market. China has mandated that EVs make up at least 40% of total sales by 2030, and California wants all new-vehicle sales to be zero-emission by 2035.
It seems the whole world is moving in this direction, and there are going to be a lot of winners among EV manufacturers. Tesla, with its global strong brand and sales head start, is set up well to be the leading and strongest of them all, but the competition can’t be ignored.
Investors also need to watch what is going on in China carefully. That important market was initially receptive to foreign automakers, but lately the government seems to be favoring local start-ups over international companies like Tesla. These things tend to be cyclical, and Tesla is building its local credentials in China with a factory in Shanghai. But given China is the world’s largest auto market, it must be watched closely.
The Bottom Line
Tesla can be a polarizing stock, in part thanks to Musk’s theatrics, but it is hard to deny the results the company has put up or the stock’s 900% gains over the past three years. Its CEO’s track record for being out ahead of the curve when it comes to innovation, Tesla has earned a spot as a foundational stock and a true “billion dollar company”
Barok
Is Tesla stock expected to rise?
Can it hit 1000?
LOVE TSLA 😍😍😍 its up by 8% over the last week (five trading days) and currently trades at about $710 per share.
Can you trade tsla with cfd?
Yes you can, investors may trade in the Pre-Market (4:00-9:30 a.m. ET) and the After Hours Market (4:00-8:00 p.m. ET).
My best performing stock in my portfolio.
Love the content btw, and I’m gonna check out more of your articles you guys deserve it keep up the grind
I invested in Tesla back in 2018, I was very much a bear, My reasoning was simple: Tesla was trying to do what no American automaker has done so far: Develop and sell a mass-market electric vehicle. It was trying to do what no American company had done in nearly a century: Start up a new auto manufacturing business. To take it a step further, I bought 40 shares from Tesla miners, investing about $1,800 in total with part of the proceed from a 401(k) rollover. At the $908 per share price I sold at,that’s a realized profit of $35,000! It may not be a life changing money, but it’s an incredible return nonetheless
The way Elon musk talks is like he’s from the future hahah and he’s trying not to say something that might disrupt the space and time continuum.
you have to watch this 😂😂 That smug laugh is so awesome.
https://www.youtube.com/watch?v=qjvrKQTkTps