Tesla’s stock is once again at the forefront of investor attention, driven by optimism surrounding its Full Self-Driving (FSD) technology and Robotaxi business. This renewed enthusiasm has seen Tesla’s Price-to-Earnings (P/E) ratio skyrocket to 103, the highest among the "Magnificent Seven" stocks. For context, Nvidia—the AI powerhouse—stands at a much lower P/E ratio of 54.
Adding to Tesla's momentum is its perceived advantage under the incoming Trump administration. Elon Musk's public support for President-elect Donald Trump has positioned Tesla as a potential beneficiary of self-driving regulatory reforms. Trump’s transition team is reportedly prioritizing a federal framework for autonomous vehicles, which could unlock new growth avenues for Tesla’s Robotaxi division.
Record-Setting Rally and Financial Milestones
Tesla’s shares have rallied an astounding 69% in just over a month, adding $55 billion (€53 billion) to its market value, which now stands at $1.35 trillion (€1.29 trillion). Year-to-date, Tesla's stock has climbed 57%, a remarkable turnaround from negative performance prior to the election.
The surge was partly fueled by robust Q3 financial results. On October 22, Tesla reported a 12% jump in its share price following the release of strong earnings. Automotive revenue grew by 2% year-over-year, while total revenue increased by 8%, marking the strongest growth in a year. Vehicle deliveries rebounded, with 462,890 electric vehicles delivered in Q3—a 6.4% year-over-year increase.
Robotaxi and Cybercab: Paving the Road Ahead
Tesla's Robotaxi initiative, bolstered by its FSD technology, remains the company’s most promising growth driver. At the recent “We, Robot” event, Elon Musk showcased the Cybercab and Robovan, autonomous vehicles designed without steering wheels or pedals. Despite regulatory hurdles, Musk envisions this business propelling Tesla’s market cap to $5 trillion (€4.8 trillion).
Cathie Wood’s ARK Invest aligns with Musk's optimism, projecting that by 2029, 90% of Tesla’s earnings will come from the Robotaxi business. The firm predicts Tesla’s stock could reach $2,600 (€2,484) by the same year.
Regulatory Shifts and Competitive Landscape
The Trump administration’s potential relaxation of self-driving regulations could serve as a game-changer for Tesla. Legislative support for mass adoption of autonomous vehicles would allow Tesla to scale its Robotaxi operations significantly.
Ironically, Tesla may also benefit from the removal of electric vehicle subsidies. While this could harm competitors reliant on government support, Tesla’s profitability—despite reduced regulatory credits—positions it to emerge even stronger in the EV market.
Source: Euronews
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