Is Tesla a good investment?

[reeshau]

Also, their Austin taxis will be Model Y's, since the robotaxi, with no steering wheel, can't have a safety driver.  It would be an interesting paradox to see robotaxi production start, sinking all that capital, but without a system ready to utilize them.  Would even Elon have that much hubris?

That's rhetorical, right?

Just boggling, is all.  Tesla came near bankruptcy 3 times, up through the launch of the Model 3.  Elon, like so many tech entrepreneurs, succeeded by taking tremendous risks.  He certainly has not shown any change in that mindset.  Tying up Tesla's cash in non-productive cyber cabs could cause a new cash crisis, if sales continue to slump, and the renewable energy credits are killed in the new budget.

[Telecaster]

Tesla did apply in California, which was approved in March.

To be clear, the permit was not for ride hailing.   The permit allows them to pick up employees.   As far as know, Tesla has not yet applied for a ride hailing permit in California. 

[Telecaster]

Also, their Austin taxis will be Model Y's, since the robotaxi, with no steering wheel, can't have a safety driver.  It would be an interesting paradox to see robotaxi production start, sinking all that capital, but without a system ready to utilize them.  Would even Elon have that much hubris?

They can have a remote safety operator, which is how Waymo does it.   Earlier, Tesla released a video of a Model Y with a safety driver in the car picking up employees in Austin.  I'm not sure if they intend to have a safety driver in the car, or if they will go remote for their June rollout.   

[MustacheAndaHalf]

CNBC interviewed Elon Musk days ago about Tesla and other topics.

For context, Musk has claimed full-self driving will happen for many years, over and over.  He's been wrong every single time, and he's making those same claims again.  If you want to believe him, fine, but just know his track record on this prediction is very poor.

When asked if heading DOGE was worth it, Musk said Tesla sales are making a recovery.  Tesla Model Y is the best selling car.

Waymo's autonomous driving relies on LIDAR (laser-based radar) and more cameras than Tesla.  Musk explains they dropped LIDAR not because of cost, but because it created conflicting information with cameras sometimes.  He also pointed out that roads were built for humans, who have eyes and a neural network, so that is Tesla's approach as well.

When asked about permits in California, he said Waymo has permits.  A follow up question was "But Tesla still has to get permits, right?", to which Musk agreed... but then went on a tangent about permits in different cities and states.  It sounded a bit evasive about the permit status in California, to me.

China doesn't allow Tesla to use video from China to train its autonomous driving.  Despite that, Musk claims that Tesla's autonomous driving (supervised) is better than BYD's.  Tesla charges $99/month ($1188/year), or you can buy it up front for $8,000 USD (and about $8,800 USD equivalent in China).  Meanwhile BYD charges nothing.  BYD and Tesla seem to both be reaching autonomous level 3 around the same time.

I stopped watching because the commercial breaks became longer than the interview segments, but you can find segments of it on YouTube.

[Telecaster]

I saw that interview.  For the most part I didn't believe what he said. 

He said sales were fine except in Europe.  I don't believe this.   Tesla is offering all kinds of incentives right now.  You don't do that if sales are fine.

He may be correct about LIDAR, but maybe not.   LIDAR works in the dark and low light, and can measure distance.  It is certainly simpler to only have one type of sensor, but he's downplaying the advantages.   FWIW, Tesla is LIDAR manufacturer Luminar Technologies largest customer.  So I think Tesla still has one foot in LIDAR water.

Tesla has permits to pick up employees in California.  It does not have AV ride hailing permits in any jurisdiction except Texas that I'm aware of.   That helps clarify where Tesla is in the AV ride hailing process.   Namely, their tech isn't advanced enough to apply for permits.

[NorCal]

Just to exercise my finance muscles (I work in the field), I recently built myself a stock screening spreadsheet.  I just took a random set of 20 companies from one of my broad ETF's.  I forecast their future FCF through 2029 using a regression formula, and discounted those FCF's at a 10% hurdle rate to calculate a fair value.  I added Tesla to the spreadsheet just for the hell of it. 

It's a decent methodology for screening, but it has limitations for companies with low, negative, or declining FCF.  I also use a static number for share count, so I don't factor in equity comp or share buybacks.  I'm also using an average cash flow formula instead of the technically correct NPV formula to simplify assumptions about post 2029 growth. 

Linear Regression's answer has Tesla's FCF stabilizing around $1.1B/qtr.  Analyst bulls obviously have this number growing tremendously, and the consensus on this forum seems to expect that number to be too high.

Regardless, assuming ~$1.1B in quarterly FCF going forward, I get a fair value on the stock of $13.90.

Interestingly, Uber came up as a potential stock to research further.  Their cash-flow has gone from negligible in 2022 to ~$2B a quarter in the last year.  The valuation doesn't seem ridiculous given the growth profile. 

[Stasher]

Interestingly, Uber came up as a potential stock to research further.  Their cash-flow has gone from negligible in 2022 to ~$2B a quarter in the last year.  The valuation doesn't seem ridiculous given the growth profile.

May 22, 2025  "More than five years after Uber first launched its ride-hailing services in Metro Vancouver, the company is now set to expand across British Columbia — beyond its current service areas of Metro Vancouver, the Fraser Valley, Greater Victoria, and Kelowna."

https://dailyhive.com/vancouver/uber-ride-hailing-bc-province-wide-expansion-launch-date

[41_swish]

None of it makes sense anymore. What has really changed to make the stock bounce back so much?

[Retire-Canada]

None of it makes sense anymore. What has really changed to make the stock bounce back so much?

Meme stocks gonna meme. Don't think about it too hard.

[reeshau]

It's almost June, so Austin is going to be wowed with driverless taxis that have no steering wheel, no geofencing, and previewing what your own car can do.

Or, they will get a second robotaxi like Waymo, but somewhat less capable.

[joemandadman189]

Tesla is currently 1.67% of a share of VOO and 1.44% of a share of VTI.

Tesla is the 7th biggest company by market cap in the SP500 with a value of $1.15 Trillion dollars as of May 28th, 2025

I dont think companies get this big because they are a meme stock

[Telecaster]

I don't like the term meme stock very much, and don't think it applies to Tesla. Telsa is profitable company with $97 billion in revenue.    I think the stock is mispriced, however.   

In 2000, companies like Intel, Cisco, and GE were all in the top 7 by market cap.   And if you had invested money in them at that time, you would be under water to this day.   

So, you can have a large market cap and still be mispriced. 

[dragoncar]

Tesla is currently 1.67% of a share of VOO and 1.44% of a share of VTI.

Tesla is the 7th biggest company by market cap in the SP500 with a value of $1.15 Trillion dollars as of May 28th, 2025

I dont think companies get this big because they are a meme stock

Interesting.  Enron was also the 7th biggest company at one time...

[reeshau]

Shown a different way:

Tesla's P/E is 6x Microsoft.  But, it could conceivably earn that, with a better business model.

Below is a graphical breakdown of each company's income statement for the latest quarter.  Which company has the better business model?

That's the conundrum, and the difference is just how much Tesla is a speculative / meme stock.