Image source: Getty Images
It's going to be a big day Tesla (NASDAQ: TSLA) stock investors on October 10. I'm getting a sense of déjà vu as I write, but this is the time when Elon Musk will finally unveil the company's long-awaited robot.
In anticipation of this delayed event, Tesla's stock rose 25% in just two months. Should I invest now in case it goes up a lot? Here are my thoughts.
The glitz and glamor
Tesla is not holding back on the Hollywood-style event that it calls “We, Robot“. It will be on Warner Bros. Discovery IncThe movie studio can also demonstrate innovations in wireless charging technology (I think it's beneficial since driverless cars can't plug themselves in!).
Investors will want to hear how the company's big investment in artificial intelligence (AI) is progressing. Unlike robotics rival Waymo, which relies on LiDAR and detailed mapping, Tesla uses computer vision for its driverless technology. Its AI learns from vast amounts of driving data, allowing it to make real-world decisions and continuously improve through machine learning.
Tesla's approach can be flexible and scalable, because it does not rely on expensive mapping efforts. Along with purpose-built robotaxis, Musk sees Tesla owners making money by sending their cars to the ride-hailing network, which he says will be “cthe purpose of Airbnb again Uber“.
Currently behind Waymo
However, the company's approach presents regulatory challenges in terms of ensuring the safety and reliability of its AI technology. So, we don't know when these cars will be used in the scale. Remember, Musk originally promised a giant robot ship by 2020!
Currently, AlphabetsWaymo already has hundreds on the road and will roll out more to other US cities. These will be available through the Uber app.
Tesla still needs to get federal regulatory approval to operate a fleet of robots. That can take years. So he'll need to put his skates on or risk falling too far behind.
It is more important than a carmarker
These risks are heightened because Tesla is currently considered the fastest growing AI robotics company. The price-to-sales (P/S) ratio is 8.8, while the price-to-earnings (P/E) multiple is 79.
In accordance with Nasdaqthe 12-month price-to-earnings growth (PEG) ratio is 6.5. Generally, a PEG below one is considered attractive.
So, if we value Tesla as an electric vehicle (EV) business, its $754bn market cap is absurd. It faces slow sales, low margins, and increasing competition.
Will I invest?
At the event, Tesla will need to impress with its robotaxi and provide a realistic timeline for mass production. If not, I'm afraid the stock will be oversold.
Even the most optimistic timeline suggests that cars (and the Optimus humanoid robots) won't have a material impact on revenue for another few years. So the current estimate seems to be divorced from reality.
Tesla is arguably one of the most innovative companies in the world and I wouldn't bet on Musk one day fulfilling his independence ambitions. I will definitely be popping the popcorn to watch the live stream of the robotics event.
I have owned the stock in the past and would consider doing so again. However, for now, I think there are better growth stocks in my portfolio.
Source link
