Today is the day that Donald J. Trump takes the oath of office and returns to the White House. Among the ‘Who’s Who’ expected to be in attendance at the inauguration is Tesla, Inc. (NASDAQ:TSLA) CEO, Trump ally, and future Department of Government Efficiency co-head Elon Musk.
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Musk’s close proximity to power can be credited with a decent portion of Tesla’s recent wave of stock gains. Expectations connected to Musk’s standing with the new administration—in addition to Trump’s well-known dislike for regulation—have helped shares shoot up by almost 70% since the election.
And yet, at the end of the day, Tesla still has to deliver. This includes both new vehicles as well as the highly-anticipated robotaxi service.
One investor known by the pseudonym Bluesea Research is concerned that company will not be able to bear the weight of these great expectations.
“Any setback in the robotaxi service could cause a huge bearish sentiment towards the stock and lead to massive correction in the next few quarters,” explains the investor.
Musk has asserted—multiple times—that 2025 will be the year that Tesla launches its robotaxis, notes Bluesea. And yet, as the investor points out, it was recently reported that the company’s Full Self-Driving technology (a prerequisite for a successful Robotaxi service) requires human intervention every 13 miles.
Any kinks could be devastating, expands Bluesea. “Even a few major accidents during the initial launch of robotaxi service could completely change the customer, regulatory as well as Wall Street view of the service,” the investor details.
Bluesea also voices concerns regarding competition from Google’s Waymo, which is currently taking 150,000 trips a week (up from the 100,000 trips a week Waymo was accumulating less than six months ago). This could afford Waymo an “unassailable lead” over Tesla’s robotaxis when the company does eventually roll out this service, explains the investor.
Looking beyond robotaxis, Bluesea spots some turbulence on the horizon when it comes to vehicle deliveries. The investor highlights major hurdles in both China and other international markets, which might make it difficult for Tesla to meet the 20% to 30% delivery growth Musk has forecasted.
For Bluesea, these concerns–and a “very high premium” of 100x the EPS estimate for the year ending in December 2026–have convinced the investor to rate TSLA a Sell. (To watch Bluesea Research’s track record, click here)
Wall Street presents a mixed picture regarding TSLA’s prospects for the coming year. With 13 Buy, 12 Hold, and 9 Sell ratings, TSLA holds a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $329.63 would yield losses of ~23%. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
