Source: PaxForex Premium Analytics Portal, Fundamental Insight
Few industries demonstrate such clear and significant growth potential as electric vehicles (EVs) currently. Analysts forecast that by 2030, two out of every three cars sold globally will be an EV. For investors aiming to tap into this burgeoning sector, one standout option is Tesla.
Tesla has spent years perfecting its vertically integrated supply chain, expanding its production capacity, and delivering some of the most in-demand vehicles on the market. These efforts have solidified Tesla's position as the leading EV company in the industry. However, this opportunity may not suit every investor.
Currently, Tesla's market valuation is about five times higher than that of the second most-valuable automaker, Toyota. This disparity is reflected in the price-to-earnings (P/E) ratio, with Tesla trading at 47 compared to Toyota's 7. Even the third most-valuable automaker and Tesla's closest competitor in the EV sector, BYD, has significant ground to cover to match Tesla.
This discrepancy underscores what many term the "valuation dilemma." Some analysts argue that if Tesla's stock were valued solely on its EV business, it would be worth around $135. Despite the healthy growth in its energy production and storage segment, this doesn't account for the gap between the base EV valuation and its current stock price of about $185.
The market is banking on the success of Tesla's ambitious projects, such as humanoid robots, autonomous vehicles, and robotaxis, which are not yet generating revenue. This presents a potential challenge for investors. While Tesla is poised to benefit from its dominance in the EV market and the rising global adoption of EVs, substantial future returns will hinge on the successful development and commercialization of these transformative technologies.
Fortunately, the company is making notable strides. Its supercomputer, Dojo, which is integral to its artificial intelligence (AI) future, has doubled its computing capacity in just 2024. Recently, CEO Elon Musk announced that Tesla will unveil its autonomous vehicle in August and plans to launch a robotaxi business upon achieving full autonomy - an initiative that could potentially double its revenue, according to some estimates.
Additionally, Tesla's humanoid robot, Optimus, has advanced to the point where it is already being used in Tesla's factories for repetitive tasks, with plans to market it by 2025. Analysts predict that humanoid robots could eventually surpass the popularity of cars, with Musk estimating a potential market worth over $1 trillion, of which Tesla could capture a significant 10% share.
While there is still considerable progress to be made, the potential societal impact of these technologies - and their corresponding effect on Tesla's stock - could be monumental. However, investors must remain realistic about the associated risks, especially given Tesla and Musk's reputation for optimistic timelines.
Therefore, Tesla's stock is best suited for investors with a high risk tolerance and a long-term investment perspective. Few other companies provide such exposure to the technologies of the future as Tesla does. Despite the inherent risks, its combination of EV market leadership and innovative ventures offers a unique opportunity for significant rewards for those willing to take the plunge.
As long as the price is above 170.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 181.92
- Take Profit 1: 190.00
- Take Profit 2: 200.00
Alternative scenario:
If the level of 170.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 170.00
- Take Profit 1: 155.00
- Take Profit 2: 145.00
