Tesla (TSLA) is among the most fascinating corporations on the earth. That is primarily attributable to its twin standing as each a revolutionary know-how firm and a meme inventory. On one hand, Tesla is pioneering so many new applied sciences and is legitimately considered one of the perfect 6 non-FAANG shares to carry for the following decade. However, alternatively, you may have Elon Musk promoting short-shorts for $69.420 to mock traders who doubt the corporate. It simply looks as if a real banana republic over there at Tesla HQ.

Tesla’s inventory was one of many largest winners throughout 2020 and 2021, rising a staggering 1,000%. However, 2022 and 2023 have been a bit less-than-stellar with Tesla shedding roughly 50%. Heading into 2024, traders try to determine what sort of Tesla inventory forecast to plan for. As for me, I’m bullish on Tesla. However, in all probability not for the explanations that you simply assume.

Disclaimer: This text is for normal informational and academic functions solely. It shouldn’t be construed as monetary recommendation because the writer, Ted Stavetski, just isn’t a monetary advisor. 

Tesla (TSLA) Inventory Forecast

Tesla has been on a tear over the previous few years, reaching profitability a lot quicker than many traders have been anticipating. However, the previous few quarters haven’t been as rosy. Right here’s how Tesla carried out during the last three quarters:

 

Income: $23.35 billion (+8% YoY)
Internet Earnings: $1.85 billion (-43% YoY)

Income: $24.93 billion (+47% YoY)
Internet Earnings: $2.7 billion (+20% YoY)

Income: $23.33 billion (+24% YoY)
Internet Earnings: $2.51 billion (-24% YoY)

 

Income development has turn into a bit stagnated not too long ago, and CEO Elon Musk has even resorted to slashing costs on sure EV fashions to extend gross sales. These value cuts have been in response to elevated competitors from legacy automakers in addition to Chinese language EV corporations. For years, Tesla loved a novel place because the world’s solely main electrical automobile firm. However, these days are quickly coming to an finish as just about each single automaker now produces a number of traces of EVs. 

So far as whether or not or not Tesla inventory is overpriced, Tesla presently has a price-to-earnings ratio of simply 42. Whereas that is considerably greater than most automakers, it actually isn’t that a lot for a tech firm. Both manner, I don’t wish to spend an excessive amount of of this Tesla inventory forecast speaking about EVs as a result of I don’t assume that would be the principal driver for TSLA inventory shifting ahead.

Tesla’s Future isn’t EVs

The way forward for Tesla isn’t EVs – it’s robots.

Traders have all the time considered Tesla as a know-how firm first and a carmaker second. In spite of everything, Teslas are basically simply computer systems on wheels. This mentality of traders to deal with Tesla as a tech firm is what has allowed the corporate to command such excessive valuations up to now.

If Tesla was “only a automotive firm” then it wouldn’t commerce at 50X earnings (and even greater up to now). 

Proper now, Tesla is engaged on a brand new product that’s gotten a surprisingly quiet reception: the Optimus humanoid robotic. In the event you haven’t already seen movies of Tesla’s Era 2 Optimus then shortly watch this 2-minute-long video. It appears to be like like a prequel to “I, Robotic.” In the event you haven’t seen I, Robotic, it’s an previous Will Smith film the place people reside alongside robots.

Now, most individuals studying this Tesla inventory forecast will in all probability scoff and assume that this tech is no less than a decade or two down the street. It isn’t. There’s an excellent probability that Tesla’s humanoid enterprise will eclipse its EV enterprise within the few few years.

Musk’s Feedback

The Optimus remains to be a prototype. As such, it didn’t get a variety of display time throughout Tesla’s final earnings name in January. However, CEO Elon Musk had this to say about Optimus:

“Optimus clearly is a really new product, an especially revolutionary product. It’s one thing that I feel has the potential to far exceed the worth of every part else that Tesla mixed.”

Elon Musk has been recognized to hype up Tesla merchandise up to now. However, that is nonetheless excessive reward coming from the corporate’s CEO. 

Tesla’s Benefit

So far as competing within the humanoid market, one main factor that units Tesla aside is its manufacturing functionality. This can assist Tesla compete (and beat) different robotics corporations, like Boston Dynamics for instance.

Tesla is already one of many largest automotive producers on the earth and delivered 1.81 million automobiles in 2023. On the identical time, it has AI capabilities from creating automobiles that may translate over to creating humanoids. In actual fact, Tesla really makes use of the identical AI inference know-how for each automobiles and robotics (in response to Musk on Tesla’s final earnings name).  

Lastly, Tesla has the capital-raising potential to assist scale the humanoid know-how as soon as it’s prepared. Actually, Musk may in all probability pay for all of it himself if he actually wished to.

Monetizing Humanoids

So, sure, Tesla is perhaps on the forefront of the humanoid revolution. However, how will this flip into revenue for EV producers? Effectively, humanoids are clearly an rising know-how which signifies that there isn’t a set use case simply but. However, the chances are almost limitless. Tesla designed Optimus to suit easily into human society. With this in thoughts, you possibly can theoretically swap in an Optimus into no matter duties a human may do. Listed below are just a few examples: 

Licensing humanoids to manufacturing corporations to be used in factories
Promoting or renting them to customers to be used within the dwelling
Utilizing humanoids for guide, repetitive duties (sure, this possible means changing human staff at locations like quick meals eating places or supply corporations).

So far as the timeline for when humanoids can be launched, it’s robust to say. However, I’ve a sense that it will likely be a lot nearer than traders assume, contemplating the place the tech is at now and how briskly AI is accelerating. Moreover, it doesn’t essentially matter when Tesla begins taking advantage of these robots. All that issues is the hype cycle that leads as much as the robots. As soon as the hype begins to construct, traders will begin to pull projected earnings ahead.

The Elephant within the Room

One concern for Tesla shareholders is the corporate’s erratic CEO: Elon Musk. 5 years in the past, having Musk on the helm was an simple tailwind for the corporate. Previously, Musk’s conduct was likened to that of a “loopy genius” like Tony Stark. However, Musk’s conduct has felt a bit extra “loopy” than “genius” recently. When writing any Tesla inventory forecast, Musk is certainly a threat issue value mentioning.

Right here’s a fast historical past of Elon Musk’s questionable decision-making over the previous few years:

April 2022: He purchased Twitter for $46 billion – overpaying by a number of billion {dollars}.
After shopping for the corporate, he publicly fired 80% of Twitter’s workforce, whereas additionally stripping out content material moderation protections.
November 2023: Instructed advertisers, together with Disney CEO Bathroom Iger, to go f*ck themselves.
December 2023: Constancy marked down the worth of Twitter by roughly 70%. 
Jan 2024: Musk demanded that Tesla’s board offers him 25% of the corporate (value roughly $80 billion).

So, what occurs if Musk begins appearing equally at Tesla? If the board refuses to provide him extra shares, will he maintain a press convention and inform the board to go f*ck themselves? Will he lay off any engineer who disagrees with him? Will he crash the worth of Tesla by 70% with shoddy decision-making? These questions sound absurd. However, he’s performed all of these items with Twitter – so why not Tesla? 

There’s additionally the truth that Elon Musk presently runs six completely different corporations: Tesla, SpaceX, xAI, The Boring Firm, Neuralink, and X (Twitter). No particular person can realistically work six completely different jobs, which calls into query his capabilities as a CEO.

For years, Elon Musk was Tesla’s largest asset. However, he is perhaps turning into its largest legal responsibility. If Tesla can leverage the “genius” aspect of Elon Musk and mitigate the “loopy” then the long run appears to be like vibrant for this rising humanoid firm.

I hope that you simply’ve discovered this Tesla inventory forecast worthwhile in studying whether or not or not Nvidia is overvalued. In the event you’re fascinated by studying comparable articles, make sure to subscribe under to get alerted of recent articles from InvestmentU.