Tesla (NASDAQ: TSLA) stock has never been one for the faint of heart. Wild swings of 50% one way or the other have long been the norm!
The past year has certainly been no different. Between June and December 2024, the share price skyrocketed nearly 150%, before plummeting 53% inside three months. Since the end of March though, it’s jumped 25%, putting Tesla’s market cap back above $1trn.
Any investor who ploughed 10 grand into the shares just three months ago would now have £12,500, before adjusting for exchange rates. So this has proven to be a classic dip-buying opportunity for savvy investors.
Robotaxis are finally here…
Tesla makes electric vehicles (EVs), but its value hasn’t rested on just those for a long time. Indeed, its market value exceeds the combined market cap of the next 10 biggest carmakers!
The stock’s price-to-sales ratio is nearly 12, which doesn’t make sense when the firm’s top line hasn’t been growing. In May, its new car sales in Europe fell by 28% from a year earlier. This is the fifth consecutive month of falling European sales.
Again though, investors don’t seem to care. For them, it’s mainly about autonomous vehicles. Therefore, the long-awaited trial launch of robotaxis in June was a big deal.
From what we can gather, the pilot launch in Austin, Texas, was a bit of a mixed bag. They’re on the streets, but only in daylight, and with a “safety driver” in the front passenger seat.
And there have been a few glitches that regulators want information about. For example, one car was filmed braking erratically, seemingly “confused” by flashing lights from a parked police car nearby. Another was speeding, which seemed to go down well with the YouTuber filming inside!
As far as I’m aware, rival robotaxis from Waymo haven’t been caught speeding, even when the other cars around them are doing so. Musk wants Tesla’s robotaxis to use vision/cameras like human drivers, so perhaps the AI was just fitting in with the other cars around.
Still, I suspect regulators might take a dimmer view of speeding robotaxis than YouTubers do.
Many risks
While speeding and confused bots sound slightly comical, a serious incident would be a different matter. It would almost certainly derail a full launch, potentially for many months.
This risk obviously increases as Tesla puts “hundreds of thousands” of robotaxis into service by the end of 2026, according to CEO Elon Musk.
With no exciting growth to fall back on in the core EV business, another long delay in commercialisation could have dire consequences for the share price. Another worry I have is BYD, the Chinese EV and hybrid plug-in giant that’s now outselling Tesla.
Finally, President Trump’s ‘big, beautiful bill’ would be a major blow to Tesla’s profits, assuming EV tax credits are abolished.
We believe that this whole robotaxi idea that you’re going to let your car go out in the middle of the night and pick up drunk people just to make money is perhaps a little bit foolhardy.
Chad Morganlander, Washington Crossing Advisors, speaking to Yahoo Finance.
My move
While I think robotaxis could be a game-changer, I don’t think Tesla at its current valuation is very attractive. Other growth stocks look more attractive for my portfolio.
