Tesla’s stock may be sitting on a year-to-date return of 56% despite spending most of 2024 trading in the red, largely due to Elon Musk’s influence and cash after Donald Trump won reelection on November 5. The company’s autonomous driving technology, full self-driving software (FSD), and Cybercab robotaxi are expected to be game-changers for Tesla.
Cathie Wood, founder of Ark Investment Management, believes FSD is the biggest artificial intelligence play in the world due to its potential to revolutionize transportation. Analysts at Wedbush Securities, Bank of America, and Stifel have increased their price targets for Tesla stock to $400 and beyond. However, regulatory hurdles remain before FSD can be fully implemented.
Despite the bullish sentiment, investors should exercise caution. Tesla’s passenger electric vehicle sales have been declining, with the company facing increasing competition from low-cost EVs in China and Europe. The company’s earnings per share (EPS) plunged 32% through the first three quarters of 2024 due to its high valuation, with a price-to-earnings (P/E) ratio of 106.6.
The Cybercab’s production is set for 2026, but real revenues are unlikely until 2027 and 2028, assuming regulatory approval and consumer demand. With Tesla’s current stock price around $390, the Wall Street price targets represent hardly any upside from here. Therefore, now may not be a good time to rush into Tesla stock.
Key data points:
* Tesla’s revenue comes mostly from selling passenger electric vehicles
* FSD is expected to revolutionize transportation with autonomous driving
* The Cybercab robotaxi has potential for huge financial opportunity
* Regulatory hurdles remain before FSD can be fully implemented
Source: https://www.fool.com/investing/2024/12/12/tesla-stock-ai-play-2-reasons-avoid-heading-2025