Investor's Corner
Tesla at $420 is a bargain considering its Autopilot data is key to a self-driving future
Questions continue to swirl around the fate of Tesla stock (NASDAQ:TSLA) as the market waits for updates about Elon Musk’s initiative to make the company private. Tesla’s privatization, provided that it does go through, will be the largest one in history, amounting to around $70 billion at Musk’s target of $420 per share. While this amount is substantial, $420 is actually a pretty good deal for Tesla’s would-be funding partners, considering the volume of Autopilot data the company has gathered from its Model S, Model X and Model 3 fleet.
Tesla’s possible privatization has caused wild swings in Tesla’s stock price, though not too far a departure from its usual volatility. Upon Musk’s announcement, shares climbed up 11%, before falling back as reservations emerged from critics about the plausibility of the company’s privatization. On Thursday’s after-hours, Tesla stock recovered some of its losses as the company’s board of directors issued a statement stating that they would formally review Musk’s plans.
Gene Munster, Managing Partner at Loup Ventures believes that there is more than a 50% chance that Tesla would become a private company. Munster noted that while concerns about the possible repercussions of Musk’s go-private Twitter announcement might affect the stock, the effects would only be felt at the very short-term. Ultimately, the venture capital firm believes that neither Tesla nor Elon Musk is at legal risk, especially since the company stated on a 2013 Form 8-K that social media might be used as an outlet for disseminating company information. Loup Ventures also estimates that Tesla would need around $25-$30 billion to take the electric car and energy company private.
If Loup Ventures’ calculations prove accurate, the entities providing the company with the funding to go private would be getting quite a deal at $420 per share. Apart from Tesla’s electric car and energy business — both of which are growing at an immense rate — investors would also be buying into a company that holds what could very well be automotive world’s most extensive amount of real-world driving data. As of July, a report from MIT’s Lex Fridman estimated that Tesla had acquired around 1.2 billion miles on Autopilot and approximately 7.8 billion miles in Autopilot “Shadow Mode.”
In comparison, Waymo’s fleet of vehicles have driven a total of 5 million real-world miles in self-driving mode and an additional 5 billion miles in simulation as of May this year. GM Cruise, another leader in self-driving technology, does not release the numbers of its fleet, but accident and disengagement reports based on autonomous miles driven provide a rough estimate of the miles Cruise’s vehicles have traveled so far. Between June 2015 and November 2017, the California Department of Motor Vehicles estimated that GM Cruise’s self-driving cars covered a total of 141,691 miles in CA. Morgan Stanley analyst Adam Jonas estimates Waymo to be worth $175 billion. GM Cruise, on the other hand, is valued at $11.5 billion after securing more funding from Softbank’s Vision Fund earlier this year.
Tesla’s development of self-driving technologies has taken a backseat in the media coverage of the company, particularly during the past year as the company struggled with the Model 3 ramp. Regardless of this, Keith Wright, a professor from Villanova University, notes that Elon Musk’s decision to invest heavily in AI would likely pay off soon. Among the participants in the self-driving race, Tesla is the company with the most real-world experience. Elon Musk once noted that it would likely take around 6 billion real-world miles before regulators would approve self-driving technology. So far, Tesla is the company closest to that mark.
Tesla’s focus on data gathered from real-world miles was emphasized by Nidhi Kalra, a senior information scientist for the RAND Corporation, a nonprofit research organization. According to the information scientist, simulations such as the ones used by Waymo to train its fleet of autonomous vehicles are a “simplification” of the real world.
“The problem with any simulator is that it’s a simplification of the real world. Even if it stimulates the world accurately, if all you’re simulating is a sunny day in Mountain View with no traffic, then what is the value of doing a billion miles on the same cul-de-sac in Mountain View? I’m not saying that’s what anyone’s doing but without that information we can’t know what a billion miles really means. Real-world miles still really, really matter. That’s where, literally, the rubber meets the road, and there’s no substitute for it,” Kalra said.
And Tesla is just getting started. In Tesla’s Q2 2018 earnings call, the company provided an update on its efforts to develop its own self-driving hardware. According to Pete Bannon, who leads the development of Hardware 3, the company’s new hardware is different from the industry standard.
“We did a survey of all of the solutions that were out there for running neural networks, including GPUs. We went and talked to other people like at ARM that were building embedded solutions for running neural networks. And pretty much everywhere we looked, if somebody had a hammer, whether it was a CPU or a GPU or whatever, they were adding something to accelerate neural networks. But nobody was doing a bottoms-up design from scratch, which is what we elected to do.”
“We had the benefit of having the insight into seeing what Tesla’s neural networks looked like back then and having projections of what they would look like into the future, and we were able to leverage all of that knowledge and our willingness to totally commit to that style of computing to produce a design that’s dramatically more efficient and has dramatically more performance than what you can buy today.”
Tesla could very well be approaching its most significant turning point in years. Regardless of whether Tesla becomes private or not, one thing seems sure — once Tesla starts rolling out its first full self-driving features, and once Hardware 3 makes it to the company’s fleet, leaders in the self-driving industry would probably be forced to recognize the presence of a new, possibly dominant player.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
Tesla gets its latest short from Michael Burry: ‘Happy it jumped back to this level’
Tesla short seller Michael Burry, the subject of the film “The Big Short,” where he was portrayed by Steve Carell, has revealed he has opened a new bet against the stock.
In a new update to his Substack newsletter in a post titled “Trading Post June 30, 2026,” Burry revealed a new set of bets against Tesla, Caterpillar, NVIDIA, Applied Materials Inc., and the iShares Semiconductor ETF.
In regard to Tesla, Burry wrote:
“And finally I shorted Tesla at 416.22. Happy it jumped back to this level.”
This means Burry likely opened his new short position after the company’s recent rally on Wall Street, which saw Tesla shares sink in mid-May, only to recover to well over the $400 mark. Currently, shares trade at around $427.
The company saw a big Tuesday as shares climbed considerably, over 10 percent. The size of the Tesla short was not provided, nor did Burry give any information on the position’s structure, the number of shares, dollar value, or whether options were used in the short.
The Tesla and SpaceX merger everyone is talking about is quietly building
Over the years, Burry has been one of the more vocal critics of Tesla, calling its share price “media inflated,” and saying it was “ridiculously overvalued” as recently as December.
The company has largely transitioned away from being known as an automotive company and instead is much more widely regarded as an AI play, mostly due to its Full Self-Driving efforts, Optimus robot development, and data collection related to both.
This has not pulled those skeptics away from being vocal about their distaste for how Tesla is valued, but there’s no denying that the company is a global force in many things, including sustainable energy, automotive, and AI.
Wedbush Securities is initiating stock coverage on SpaceX (NASDAQ: SPCX), marking the first comments on the company since it went public several weeks ago. Wedbush and its analyst handling coverage, Dan Ives, are widely bullish on fellow Musk company Tesla (NASDAQ: TSLA).
Ives wrote his first note initiating coverage of SpaceX shares on Wednesday with a $190 price target and an ‘Outperform’ rating. The firm believes the company is well positioned off of its IPO because of its wide array of projects, including AI compute power and infrastructure, connectivity projects, and launches.
“We view SpaceX as one of the most differentiated assets within the tech market with a strong footprint across its three core markets, with Starlink driving success with connectivity,” Ives wrote, “Starship launches leading to a demand flywheel and increasing deal flow for its Colossus clusters.”
Elon Musk called it Epic: The full story of SpaceX’s Starship Flight 12
Wedbush leans heavily on Starlink, which they say is the “profitability driver given the strength of its recurring revenue base of ~12 million subscribers as of June 5th.” Ives believes Starlink is still in the “early innings” of penetrating the global telecommunications and broadband market, as it only holds less than a 1 percent share. However, this number is sure to increase over time.
It also highlights the importance of Starship, which it says is an “essential layer” of SpaceX’s overall success. SpaceX developing and displaying the ability to reuse rockets is a major cost and reliability advantage “as it reduces the necessary hardware launch costs while generating a feedback loop for future flights to improve their launch flight rate without accelerating capex spend.”
Finally, SpaceX’s recent AI/Compute projects are also very elementary, Ives writes. It is worth mentioning Wedbush said its $190 price target is derived from a valuation forecast that sees the company yielding roughly $2.48 trillion of implied enterprise value.
There are also some factors that Wedbush did not take into account with its initial coverage. The firm wrote in the note:
“We note that there is optional value coming from Starship’s accelerating scale towards sub-$200/kg unit economics, orbital data centers, and enterprise AI monetization as these factors could drive meaningful upside but these face major hurdles, so we do not take that into account with our valuation.”
SpaceX shares are down just over 2 percent today, trading at around $167 at the time of publication.
For years, there have been images and videos across social media platforms that have reminded me of when I was a 15-year-old kid teased by “Xbox 720” videos on YouTube. These videos are of the supposed “Tesla Phone” that Elon Musk was secretly developing in between leading Tesla with its electric cars and SpaceX with its reusable rockets.
Would you buy a Tesla phone ? pic.twitter.com/aaTwvvIJit
— Tesla Owners Silicon Valley (@teslaownersSV) October 6, 2023
Although Musk has put those rumors to bed several times, it was never completely out of the realm that he could get involved in cell phones in some capacity. Think outside the box and more macro-level, though. Instead of reinventing the computer, Musk reinvented connectivity by developing Starlink with SpaceX.
It could be something similar, TD Cowen analyst Gregory Williams said in a note last week, where he hinted SpaceX could be gathering some steam to acquire T-Mobile.
Williams said it would be the “clear choice” for SpaceX if it decided to go through with a network acquisition. He also suggested AT&T.
The move would be possible through selling more of its own stock, which would help SpaceX raise the money to purchase T-Mobile, which would cost roughly $300 billion. It could be one of the moves SpaceX makes post-IPO in terms of an acquisition: it already acquired Cursor AI for $60 billion.
Other analysts, like Dan Ives of Wedbush, believe SpaceX and Tesla will eventually merge into one anyway, and that conglomeration could come as soon as this year, some have said.
The implications of SpaceX purchasing T-Mobile are massive. A combined entity would create a truly ubiquitous network: T-Mobile’s terrestrial 5G towers and Starlink’s growing constellation of Direct-to-Cell satellites. This would essentially eliminate dead zones across the U.S. and potentially globally.
SpaceX would instantly become a full-scale facilities-based carrier with satellite differentiation; a huge advantage. This would pressure AT&T and Verizon heavily.
There are also concerns like a potential reduction in long-term competition, and of course, a deal of that size would face intense scrutiny from government agencies.
The strategic fit is compelling due to the existing Starlink–T-Mobile partnership and complementary technologies (space + terrestrial). It could create a dominant integrated communications player. However, the regulatory, financial, and execution hurdles are enormous — this remains highly speculative with no indication SpaceX is actively pursuing it right now.
Tesla Optimus project fires up as Musk sees production line progress
Tesla gets its latest short from Michael Burry: ‘Happy it jumped back to this level’
