Why did Tesla stock drop 12% and is it a buy?
Tesla stock dropped 12% last Wednesday after reporting uninspiring earnings.
Automotive sales declined 7% for the last year, and overall sales increased by just 2%.
Investors were further disappointed after Elon Musk pushed back the robotaxi reveal date to October 10, originally slated for August 8.
It’s been a tough few years for Tesla investors. TSLA stock is trading down 40% from its 2021 highs.
Is Tesla stock a buy?
While many Wall Street analysts believe Tesla is significantly overvalued, I’ll take the other side…
TSLA is the most undervalued AI stock in the market.
Tesla reminds me of the Superman-inspired Broadway musical, It’s a Bird, It’s a Plane, It’s Superman.
It’s an electric vehicle (EV) company… it’s a clean energy innovator… it’s an artificial intelligence leader.
Have you seen a chart of EV sales lately? They’re going parabolic. Hockey-stick growth:
And they’re no longer just toys for rich people. It’s now cheaper to drive an EV in every US state if you charge it at home.
The reason we haven’t invested in EVs is that making cars is an awful business. It’s ultra-competitive. Companies compete away all the profits, leaving shareholders with zilch.
Battery-powered cars are simply “act 1” for Tesla. The real opportunities are self-driving cars and robotaxis (AI on wheels).
Every automaker is churning out EVs.
But only two — Waymo and Tesla — are leading the robotaxi race. If Tesla can stay on the cutting edge, this opportunity is worth hundreds of billions of dollars.
Tesla recently pushed back the unveiling of its robotaxi by two months, until October. Investors took this to mean the tech isn’t ready. Fair.
Do you remember what year the iPhone launched? Many people know it’s 2007.
But do you know what month it launched? Probably not. Because it doesn’t matter to the big picture.
Exactly when Tesla launches its robotaxis doesn’t matter. It’s a leader in one of the most important innovations for the next few years.
Invest accordingly.
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P.S: For more insights and specific stock analysis, subscribe to my investing letter The Jolt⚡.
I publish fresh research every M/W/F.
— Stephen McBride, Chief Analyst at RiskHedge
