Everywhere he goes, Tesla, Inc. (NASDAQ:TSLA) CEO Elon Musk seemingly makes headlines, and this was certainly the case when the company unveiled its Q4 2024 numbers late last month. Though weakening EV delivery and sales numbers left a tad to be desired, Musk’s optimism was undeterred.
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Indeed, one can count on Musk to tell a compelling story, and this time was no exception, especially when it comes to the company’s robotaxi ambitions. The CEO declared that TSLA will begin offering its autonomous ridesharing in Austin to paying customers this coming June before expanding to other cities around the country.
One top investor who is known by the pseudonym JR Research is not convinced that Musk will succeed in meeting these great expectations this time around.
“The recent bear market in TSLA stock reminds investors of the danger in relying on the Elon Musk hype and his past overstated promises,” cautions the 5-star investor, who is in the top 1% of TipRanks’ stock pros.
JR acknowledges that many wise men are banking on Musk’s ability to deliver on the incredible. And yet, there is history that is a bit concerning, warns the investor.
“To be clear he doesn’t have quite an enviable record when it comes to delivering on the goods for his autonomous ambitions, notwithstanding his incredible achievements,” JR explains.
There is a lot at stake, reminds the investor. TSLA’s valuation north of $1 trillion means that the company is trading at a forward adjusted EPS multiple of greater than 120x. This is significantly more than the 4x median of the auto industry, adds JR, meaning that TSLA’s valuation is likely based on robotaxi excitement.
“As the date for its robotaxi rollout inches increasingly closer, I believe the market will likely reassess whether Musk could yet again have overestimated his execution prowess, which could likely continue TSLA’s downward spiral to a more reasonable valuation level before consolidating,” concludes JR, who is maintaining a Sell rating. (To watch JR Research’s track record, click here)
Wall Street is firmly straddling the fence. With 12 Buy, 12 Hold, and 10 Sell ratings, TSLA has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $336.48 implies minimal downward movement over the year to come. (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.
