Asking where Tesla shares will be in a year’s time is the same as asking if the future is for dreamers or realists. Elon Musk has made Tesla into something greater than a car company, it is selling autonomy, AI, and even robots as part of a vision that transcends greatness. That vision is why the stock continues to defy common sense.
But the reality is that in the short term, Tesla remains deeply attached to the fluctuations of car demand, price pressure, and rivalry. Investors must keep in mind that purchasing Tesla at $420 today is less about its fundamentals today and more about making a bet on its promise of tomorrow.
The actual wild card is Tesla’s venture into Robotaxis. If it can scale, the potential is huge, which will bring in better margins, subscription revenue, and a services business stacked on top of cars that have already been sold. That would be sufficient to justify current lofty valuation and possibly even drive shares higher, but this is a dangerous route. Autonomy demands regulatory approval, perfect execution, and public confidence, and these are the barriers that have stumbled Tesla in the past.
On the other hand, core auto margins are strained, the revenue declined in the fourth quarter, and high R&D spending are devouring profits. Yes, Tesla sits on $36.8 billion in cash, which creates breathing space for it to make bets, but cash reserves will not eliminate the dangers of being too early or too bold in autonomy.
Tesla is risky and promising. The next 12 months will see a combination of advances and setbacks, with the stock remaining unpredictable but not lost. Tesla stock within a year may be an exciting success or a cautionary tale that will tell us how unreliable innovation can be.
Investors have to determine if they’re willing to buckle up for the ride, understanding that the endpoint is far from guaranteed. Also, at times the ride with Tesla is as crazy as the dream itself.