Current Stock Performance and Market Context
As of now, Tesla (TSLA) has seen modest gains in 2024, with shares up only 4% by the end of October, making it the only stock in the “Fabulous Seven” not to post double-digit returns this year. While this performance might seem disappointing, Musk remains undeterred, emphasizing the long-term vision he has for the company during Tesla’s third-quarter earnings call. He believes that advancements in technology will position Tesla not just as an automotive manufacturer but as a leader in various innovative sectors.
Key Catalysts for Tesla’s Future Growth
1. Autonomous Driving Technology
Tesla’s primary growth engine is its electric vehicle (EV) segment, but the company is keenly focused on leveraging autonomous driving technology to supercharge its valuation. The ability to develop fully self-driving cars has the potential to transform the automotive landscape.
Musk’s vision includes a fleet of robotaxis that could redefine transportation services. Instead of merely selling vehicles, Tesla could offer ride-hailing and delivery services using its autonomous cars, creating new revenue streams. This model could significantly increase Tesla’s profit margins, as the software that powers self-driving capabilities is expected to be more lucrative than traditional vehicle sales. Higher profit margins would lead to improved net income and free cash flow, making Tesla a more appealing investment.
2. Advancements in Humanoid Robotics
In addition to autonomous vehicles, Tesla is developing Optimus, its humanoid robot project. Musk has stated that this could become “the most viable product” created by Tesla. The idea is for these robots to assist in factories, enhancing productivity by taking on mundane tasks.
If successful, this initiative could enable Tesla to increase production rates significantly. Beyond manufacturing, Optimus could find applications in logistics and other labor-intensive sectors, potentially opening up new markets for the company. The success of Optimus could lead to a reevaluation of Tesla’s business model and a substantial boost in its overall valuation.
Should Investors Buy Tesla Stock Now?
Elon Musk’s bold statements about Tesla’s future have prompted mixed reactions from investors. Just a few months ago, Musk suggested that anyone who doesn’t believe in Tesla’s AI vision should reconsider holding its stock. This reveals his unwavering commitment to pushing the company into new technological territories.
Investing in Tesla today can be seen as a high-risk, high-reward proposition. If Musk’s visions of autonomous driving and humanoid robotics materialize, Tesla could indeed become the most valuable company globally. Conversely, failure in these ambitious projects could lead to significant stock price declines.
