After a record quarter, analysts point out that Tesla’s car sales don’t really matter anymore
Tell that to Apple and its iPhone.
Tesla currently makes 75% of its revenue — which reached a record last quarter — from electric vehicle sales, but increasingly analysts say that doesn’t matter. In other words, they’re buying what CEO Elon Musk, who has repeatedly said Tesla isn’t a car company but rather an autonomous and AI company, is selling.
Truist’s William Stein says Tesla’s auto delivery data and earnings are “decreasingly” relevant to its stock price.
“Most of the value of the shares is tied up in AI projects including (full self-driving), robotaxi, and especially Optimus,” Stein wrote. “All of the AI projects are at once quite unproven (close to zero revenue), and potentially extremely valuable.”
Barclays analyst Dan Levy, who has long argued that Tesla’s stock price is divorced from fundamentals and who has a price target for the stock at $350 (it’s currently trading at $445), says investors got the memo.
“Tesla missed on 3Q EPS, but it doesn’t matter. Because what is increasingly clear and understood is that the auto business is not the future emphasis for Tesla. Rather the focus ahead remains on Tesla’s growth endeavors in AI — autonomous and robots.”
Wedbush Securities analyst and Tesla bull Dan Ives is perhaps the biggest proponent of this narrative. From a pre-earnings note:
“The earnings/guidance on Wed are clearly important but take a backseat to the broader and important AI initiatives at Tesla. We continue to strongly believe the most important chapter in Tesla’s growth story is now beginning with the AI era now here. It starts with autonomous then robotics as we believe the autonomous valuation is worth $1 trillion alone to the Tesla story over the next few years that will start to get unlocked over the coming months.”
Tesla has long been a company that doesn’t trade on fundamentals. But that doesn’t mean car sales, which are currently integral to its top and bottom lines, are unimportant. Apple’s iPhone represents about half the company’s revenue, but Apple is still very much the “iPhone maker.” And, at least for now, Tesla is still a car company.
