Tesla (TSLA +2.96%) stock is down 14.5% this year because the company hasn’t yet released a slew of updates on its single most important near-term catalyst: its robotaxi rollout. To date, the only unsupervised robotaxis are in a limited area of Austin, Texas, and Tesla is nowhere near the kind of rollout that CEO Elon Musk previously envisaged for the company.
Today’s Change
(2.96%) $11.51
Current Price
$400.41
Key Data Points
Market Cap
$1.5T
Day’s Range
$391.65 – $409.29
52wk Range
$222.79 – $498.83
Volume
4.7M
Avg Vol
63M
Gross Margin
18.03%
Still, that doesn’t change the fact that the stock has considerable potential if and when it starts to scale a commercial robotaxi service. And if it can ultimately realize this ambitious future, then a modest investment in Tesla stock today could become life-changing wealth in a few decades.
Why Tesla stock still has huge potential
Growth stocks usually command a high earnings multiple because the market values them on their earnings potential rather than on their current earnings, and Tesla is definitely still one of those growth stocks.
Image source: The Motley Fool.
While it’s understandable that some investors keep focusing on its delivery numbers, not least because that’s where the data is and where the company’s tangible products and services are, the reality is that robotaxis are its future.
However, aspirational growth potential usually doesn’t come without high risk. In most cases, companies hoping to unleash proprietary, game-changing technology onto the world face numerous challenges. These risks include funding issues, establishing market presence, convincing customers to trust and adopt their technology, protecting their intellectual property, obtaining regulatory approval, and ensuring their technology is scalable and adaptable in the market. The list goes on.
Why Tesla is different
But here’s the thing. What if a company is about to launch a game-changing technology, and it’s already a clear market leader in its field, has no challenges with funding, has an installed base of customers that far exceeds that of any rival, boasts huge amounts of data on its technology that dwarfs its peers, offers a highly cost-competitive service, and is showing progress on working with regulators to get its technology approved?
It’s a rare combination, but it’s the investment proposition Tesla investors are facing right now.
Tesla is not an average growth company
Not only is Tesla the dominant force in electric vehicles (EVs) with market share of more than 54% in the U.S., it’s also a profitable one. That matters because peers like Ford, General Motors, and Volkswagen are aggressively scaling back EV models, which clears the field for Tesla.
The company’s powerful market presence, and more than 9.2 billion miles driven on supervised full self-driving (FSD) software ensures there’s no issue with the company establishing market recognition. Moreover, Wall Street analysts expect Tesla to end 2026 with more than $28 billion in net cash, even after aggressively ramping capital spending to support battery development, lithium refining, and the production of its dedicated robotaxi, Cybercab.
Musk has consistently outlined expectations for the Cybercab to cost less than $30,000 and to have an operating cost of approximately $0.20 per mile. In comparison, the cheapest Waymo models are estimated to cost between $75,000 and $100,000.
Is Tesla a stock to buy?
All of these arguments are true, but most were true a year ago as well. Meanwhile, the robotaxi rollout is proceeding slowly, with investors still waiting for the service to expand beyond Austin and the San Francisco Bay area.
The sluggish rollout is behind the stock’s decline this year, but that doesn’t diminish the long-term potential for a massive stream of recurring revenue from its robotaxi plans. Tesla is a speculative stock that won’t suit most investors, but that doesn’t mean it lacks substantial long-term potential to reward patient investors.
