GM - Tesla Is Still Overvalued Don't Bet On Its Robotaxi

2024-04-19 14:15:43 ET

Summary

• Tesla, Inc. is still overvalued, despite losing more than 30% of its value this year.
• CEO Elon Musk's tweet that Tesla will introduce a robotaxi business on August 8th may be supporting this overvaluation.
• In my opinion, investors should realize that a robotaxi business is not feasible for Tesla, primarily because it lacks the necessary autonomous driving platform for this market.
• In addition, Tesla faces increasing competition, including from Tesla's used vehicles.
• Eventually, the valuation gap between Tesla and others like Ford and General Motors should narrow.

Tesla, Inc. ( TSLA ) stock, a significant investment for many, has experienced a substantial decline of over 30% since the start of the year. Despite this, it remains overvalued at a forward P/E ratio of 56X. The company's recent announcement of a disappointing quarter and the decision to lay off 10% of its employees further adds to the concern.

Much of Tesla's overvaluation seems to stem from the anticipation of a groundbreaking robotaxi business. However, this belief is not without its risks. Tesla CEO Elon Musk's tweet on April 5th at 4:49 PM, announcing the introduction of Tesla's robotaxi on August 8th, has bolstered this valuation based on the promise of improved Full Self-Drive ("FSD") technology at a time when Tesla is grappling with a slowing electric vehicle ("EV") market and heightened competition.

According to an article in Investors Business Daily, or IBD, Tesla will focus on a lower-cost robotaxi instead of a Model 2....

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