Investor's Corner
Tesla and Apple’s EV sales predicted to reach $3T valuation by Wall Street
Wall Street analysts have high hopes that Tesla and Apple’s electric vehicle and autonomous sales could propel the companies towards a $3 trillion valuation each.
On Monday, TSLA stock closed at $670.00 per share, reaching a market cap of $643.10 billion. Apple stock closed at $123.39 per share, and the company’s market cap stands at $2.07 trillion.
Rumors of the Apple car have been circulating recently, reviving the tech giant’s foray into the electric vehicle market, where it will undoubtedly be pitted against Tesla. According to some Wall Street analysts, if Apple does enter the EV market and successfully produces an electric vehicle that proves profitable, the tech company may reach a $3 trillion valuation.
Nicholas Colas, the co-founder of DataTrek Research, said Tesla will need to show its profitability to reach a $3 trillion valuation.
“A $3 trillion market cap has to be a function of both the promise of a technology and some very tangible proof that its economic model is profitable and deeply profitable. “So you don’t get to $1 trillion, let alone $3 trillion by just talking. You get there by showing the numbers, by showing the profitability,” Colas told Bloomberg.
“Tesla has yet to prove remarkable profitability. And it doesn’t exactly operate in a sector that has remarkable profitability. I understand why it has the valuation it has today — breaking through on EVs and making them a mass-market concept is worth this valuation. However, getting a triple out of it requires that you then show that that business model is profitable,” he added.
With Elon Musk at the helm, Tesla has become a formidable force in the global EV industry. So the question might not be “if” Tesla can prove remarkable profitability, but “when” it will happen.
Given significant architectural changes, including fundamental improvements to pure vision, there is limited value to testing 8.x. Hoping to upload V9.0 & button next month.
— Elon Musk (@elonmusk) March 20, 2021
Tesla has steadily increased production and vehicle sales over the years. Demand for Tesla vehicles seems to be rising at a steady pace as well. And the company has started expanding its production capabilities throughout the world with Gigafactory Shanghai, Giga Berlin, and Giga Texas.
Tesla has also been releasing regular improvements to the Full Self-Driving beta. Recently, Musk estimated that Tesla would release the FSD beta button next month, allowing more owners to become beta testers. So it seems like Tesla has taken the necessary foundational steps to prove “remarkable profitability,” as Colas described it.
On the other hand, an Apple EV car would be the first electric vehicle produced by a tech giant rather than a startup or a legacy automaker. There would be some advantages to Apple’s electric vehicle. For instance, the Apple car might have technology that legacy automakers are still struggling to develop, including autonomous software.
However, Apple would also probably have to go through a steep learning curve when ramping the production of its electric vehicle. As such, reaching a $3 trillion valuation from EV and autonomous sales might not be easy for Apple either.
Disclosure: I am long TSLA.
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Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
Tesla stock closes at all-time high on heels of Robotaxi progress
Tesla needs to come through on this one Robotaxi metric, analyst says
