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I Tesla (NASDAQ: TSLA ) stock enjoyed a roaring November. It increased by 38.1%, increasing the market capitalization of electric vehicle (EV) pioneers to more than $300bn.
This has been a major market advantage among the world’s top companies. It was also the best month for Tesla stock since January 2023, and brings a five-year return of nearly 1,442%. Not too shabby.
What’s going on?
The biggest reason for stock prices in November was the election of Donald Trump. There were several reasons why.
First, CEO Elon Musk was apparently campaigning for Trump during the election. Any win for the Republican nominee is likely to boost sentiment for Tesla stock.
Second, Trump has promised to impose tariffs on US imports, including foreign-made cars. This could boost Tesla’s competitive position across the pond.
Additionally, while the expected rollout of green subsidies will present challenges for all EV makers, Tesla is in a better position to withstand this impact than its loss-making rivals. We could see more EV startups going to the wall.
Finally, along with tax cuts, Trump has promised deregulation, which could also extend to self-driving cars.
Much of Tesla’s valuation is now based on the successful rollout of a network of driverless robots. Some analysts put this market opportunity north of $1trn.
Extreme measurement
Trading at a price-to-earnings (P/E) ratio of 94, however, the stock shows great potential.
And therein lies the danger. If Tesla can’t fully perfect the self-driving technology (FSD) or continues to extend its timeline into the future, then the valuation is unsustainable.
Elon Musk has warned about this repeatedly in the past.
The company’s value is primarily based on the foundation of independence. That’s really, I think, the main driver of our value.
Elon Musk, June 2023
In Q3, more than three-quarters of the company’s revenue came directly from selling EVs.
The progress of AI
In early November, Musk also announced on X (formerly Twitter) that Tesla’s FSD technology is now “almost entirely AI“.
This means that it mainly relies on advanced neural networks and machine learning to process visual data and make driving decisions. It marks a departure from sensor-based systems.
Over the weekend, the company began rolling out its latest update (version 13 of FSD) to employees and limited customers. This improves miles driven without human intervention six times, according to Tesla.
The stock rose another 3.2% today (December 2) to $365.
My chosen stock
The technological revolution we are all living in is accelerating. Things we once thought of as science fiction – AI, self-driving cars, electric flying taxis – are advancing at an astonishing pace.
Waymo One, that is AlphabetsThe robot service, already provides more than 100,000 paid rides every week in Los Angeles, Phoenix, and San Francisco. Local taxi drivers say this is interfering with their work.
Waymo plans to expand to Atlanta and Austin by 2025, only through the Uber operating system.
In my eyes, Uber looks well positioned to capture a significant portion of this market with its platform. That’s why I bought shares in this ride-hailing giant earlier this year.
Admittedly, Tesla’s planned robot network could be dangerous here. But Uber stock is very cheap, so this is my favorite way to invest in the potentially revolutionary robotics market.
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