FYI: Despite Tesla’s diverse ventures, Wall Street remains divided on whether it’s purely an automotive stock or a multifaceted tech company.
Tesla’s True Nature: Automotive or Tech Powerhouse?
Tesla Inc. (NASDAQ: TSLA) continues to puzzle Wall Street analysts about its true business identity, but perhaps the answer is simpler than it appears. Traditionally labeled as an automotive stock, Tesla’s expanding ventures into other sectors spark ongoing debates concerning its proper characterization.
The Automotive Identity
Tesla’s fame initially stems from its groundbreaking electric vehicles (EVs). Still, beyond cars, the company vigorously pursues advancements in clean energy and artificial intelligence. This diversification prompts analysts to question whether Tesla’s stock should be pigeonholed as an automotive play or acknowledged as a technology titan spread across multiple disciplines.
D.A. Davidson analyst Gil Luria stands firm on Tesla’s automotive identification due to its revenue stream. In a note shared via Yahoo Finance, he emphasized:
"If it looks like a duck (>90% of revenue from cars) and quacks like a duck (>90% of profits from cars) it might just be a duck (a car company)… Don’t @ me."
Advocates for a Tech Lens
Contrasting sharply, Deutsche Bank’s Edison Yu views Tesla as a broader technological entity rather than merely an automaker. Yu envisions Tesla’s long-term prospects defined by its ventures beyond cars:
"At the core, we do not see Tesla as an automaker but rather a technology platform attempting to reshape multiple industries, deserving of a unique type of valuation framework."
An Emerging Power in Energy
July brought notable insights from Baird analyst Ben Kallo, predicting Tesla Energy’s growing influence on the company’s stock and overall structure. A notable highlight was Tesla’s record-setting energy storage deployment in Q2, hinting at a substantial future narrative.
"Tesla bears officially have their next big threat: Tesla Energy," remarked Kallo.
Musk’s Vision: Beyond Automobiles
Elon Musk, Tesla’s visionary CEO, encourages looking past the company’s automotive achievements. Musk has long forecasted that Tesla’s energy solutions and solar ventures will surpass automotive in both value and growth rate. He asserted in 2019:
"I think both over time will grow faster than automotive. They’re starting from a smaller base… year-over-year growth will be absolutely incredible."
The Bottom Line
Despite its diverse portfolio and transformative ambitions, Tesla remains a subject of debate among investors and analysts. As Tesla continues to innovate across various sectors, its future identity may very well reshape how the market views and values the company.
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William Kouch, Editor of Automotive.fyi
