Tesla has some great ideas but earns too little profit to be a buy.
Tesla (TSLA -7.75%) tumbled in early trading Friday, down 8.2% through 10:05 a.m. ET as investors gave two thumbs down to the company’s “We, Robot” presentation in Hollywood last night.
In no particular order, Tesla unveiled a bartending Tesla Bot…
Image source: Tesla.
an autonomous Robovan that can carry 20 passengers…
Image source: Tesla.
and a 2-door Cybercab (that on the company’s website is still confusingly called “Robotaxi”).
Image source: Tesla.
Musk’s magical number: $30,000
In an event high on glitz but low on detail, Tesla CEO Elon Musk posited a $30,000 sticker price for his new fully autonomous Cybercab and a $20,000 to $30,000 price for the Tesla Bot. No price was suggested for the larger Robovan, which was also described as autonomous. As for when the products will be available for people to actually buy, Musk said only that he hopes to have the Cybercab out by 2026.
Here’s the problem: The Tesla Bots shown at the presentation, while no longer robot suits filled by humans (as they were the last time we saw them), still looked like they were remote-operated by humans last night. They didn’t appear autonomous.
And as for the $30,000 sticker price on the Cybercab, well, it’s been more than five years since Musk promised us an electric car that cost even less than that — $25,000 — and we still haven’t seen that. Meanwhile, over in China, Tesla rival BYD now sells more electric cars than Tesla. And BYD’s new Seagull EV costs less than $10,000.
Even with a 100% tariff, that makes BYD’s cars cheaper than the cheapest Tesla on offer.
Is Tesla stock a buy?
I have to admit, this all sounds rather discouraging for a Tesla fan. While Musk’s promises sound good, they also sound like they’re some time off in the future. Meanwhile, Tesla stock is selling for 67 times earnings and 448 times its much depleted free cash flow. Oh, and analysts polled by S&P Global Market Intelligence forecast profits will only grow 15% per year through the next five years.
I fear that makes Tesla stock too expensive to buy.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
