πππTesla's $Tesla Motors(TSLA)$
CEO Elon Musk said that Autonomy is the secret sauce that will catapult Tesla's value to stratospheric heights. But as sceptics point to shrinking margins, stiff Chinese competition and fading US tax credits, is Tesla still a Buy?
Let's dissect Tesla's Q2 performance, the Robotaxi rollout and a showdown between Tesla bulls and Tesla bears waving red flags.
Tesla's Q2 Performance and Robotaxi Rollout
Tesla shares climbed 3.5% on the heels of news that its invite only Robotaxi pilot which was first tested in Austin, Texas, will soon navigate a geofenced San Francisco zone with safety drivers ready to intervene.
In Q2 25, Tesla posted its steepest revenue decline in over a decade. Sales fell 12% year on year to USD 22.4 billion, net income dropped 16% to USD 1.1 billion. Deliveries slid 14% as US tax credits waned, tariffs bite and lower cost Chinese rivals such as BYD $BYD COMPANY(01211)$
Elon Musk reveals early production of a cheaper model is already underway and predicted European sales will rebound once regulators approve his Full Self Driving software.
"Autonomy is the story" Elon Musk said. "Autonomy is what amplifies the value of Tesla to stratospheric levels."
Assessing the Buy Thesis
Catalysts
Robotaxi expansion driving future ride hailing revenues
Introduction of a lower priced model to boost volume and margins
Regulatory approvals for FSD in key markets unlocking subscription revenue.
Risks
Ongoing delivery declines as EV incentives fade.
Regulatory hurdles delaying full self driving monetisation.
Margin pressure from price cuts and rising production costs.
Valuation Metrics
Trading at P/E ratio of 183.19, a premium to other automakers
Autonomy potential is largely priced in. Further upsides demand flawless execution.
Analysts Weigh In - Bulls vs Bears
Dan Ives of Wedbush remains unwaveringly bullish, calling Elon Musk a "wartime CEO" charging into an AI driven era. He pegs Autonomy's standalone value at USD 1 Trillion by itself and expects Tesla shares to hit USD 500 within the next year.
Cathie Wood of ARK Invest has doubled down with 3 purchases this month, loading up on 115,400 Tesla shares. She forecasts a USD 2,600 price tag by 2030, driven by Robotaxis that she believes will account for 90% of Tesla's market capitalisation. She thinks that software as a service margins will be above 80%.
Wedbush's mid 2025 Outlook suggests a second half surge fueled by AI advances from humanoid robots to "glasses" for real world data gathering. Tesla is named among the top 5 tech picks for 2025, riding a USD 2 Trillion wave of enterprise AI spending.
In contrast Tesla bears say it is more " Nightmare on Elm Street " than " Starwars":
Kyle Rodda of Capitol.com argues that Q2 results were worse than expected, reigniting fears of long term decline.
Angelo Zino of CFRA labels Tesla as the lone "Hold" in the Magnificent 7, citing underwhelming fundamentals and slowing growth.
Brett Schafer of The Mortley Fool predicts that shares could plunge as low as USD 260 if deliveries falter and new products stall.
Concluding Thoughts
If you are in the mood for a high octane, multi year wager on autonomous driving and AI powered mobility, Tesla still qualifies as a Buy. Dan Ives's USD 500 target and Cathie Wood's USD 2,600 vision bank on Autonomy delivering recurring, stratospheric returns.
However if you prefer steady dividends, clear earnings visibility and minimal drama, this roller coaster ride maybe too wild. Short term traders and value hunters could heed the bears' warnings on delivery declines, margin squeezes and unproven new product gambits.
Ultimately, sticking with Tesla today means betting on Elon Musk's stratospheric vision in overcoming executional landmines. For those investors with nerves of steel and faith in Tesla's Autonomy's Ascent, buckle up. As for me personally, I prefer to invest in stocks that will allow me to sleep well at night. Slow and Steady is my motto, not Fast and Furis.
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