Proving its critics wrong time and time again, what’s next for Tesla (NASDAQ:TSLA) stock? The automotive pioneer “crushed it” on earnings, but CEO Elon Musk’s controversial tweets and statements have left shares stuck in neutral. This leaves many on the fence, as the stock treads water around $800 per share.
However, many are missing the forest for the trees. In other words, ignore recent headlines. The underlying growth story remains in play. They’re leaps and bound ahead with electric vehicles (EVs). And they’ll soon do the same with autonomous vehicle (AV) technology.
That’s why shares have made an epic rebound since March. Despite ad nauseum “sky is falling” forecasts for the company’s longtime bears.
Things look tough for the company right now, but they’re in better shape compared to other automakers. The legacy names are just fighting to survive. Tesla? They stand to thrive. As megatrends continue in the automotive space, this company is on the cutting edge. And don’t expect that edge to dissipate anytime soon.
Why Near-Term Hiccups Won’t Sink TSLA Stock
Tesla may be better positioned than its “old school” automotive peers. But that doesn’t mean immunity to current challenges. The novel coronavirus brought automotive sales to a halt. Sales in China fell 64% last month. Yet, that’s not the whole story.
Another issue is the shutdown/reopening of the company’s U.S. and Chinese facilities. I’m sure you’re aware of the battle between Elon Musk and local officials over the reopening of Tesla’s Fremont, CA facility. Fremont has since been reopened. But, the Shanghai facility is again temporarily closed.
These headlines may provide more ammunition of the company’s biggest critics. I’m talking about the short-sellers who take any opportunity to say, “the emperor has no clothes.” Yet, these recent developments do little to strengthen the bear case for TSLA stock.
If anything, this uncertainty provides you with ample opportunity to enter a long-term position. Why? These near-term headwinds won’t sink the company. With enough capital on hand to ride out today’s storms, they can continue to be on the winning side of auto industry megatrends.
As I’ve said before, Tesla is no longer a niche player. A few years back, you could make the argument that the company would be left in the dust once major luxury brands got their act together, and pushed into EVs with full force.
Yet, Tesla isn’t losing out. Instead, they’re leading the charge. Rivals like Porsche (OTCMKTS:POAHY) are playing catch up, as the company dominates EV market share. And now with AV technology marching forward, the company is ready to gain an additional edge in the space.
How AV Technology Changes the Game for Tesla and Its Rivals
You’re likely aware of this company’s solid lead in the electric vehicle game. But, that’s just the start. Despite the recent headwinds impacting production, Musk is not shying away from charging full stream ahead.
As he put it on the last earnings call: “We’re absolutely pedal to the metal on new products and expanding the company.” That doesn’t mean just an expansion of the company’s electric vehicle fleet. Nor does it mean just the company’s expansion into commercial vehicles with its Tesla Semi truck.
No, I’m talking about autonomous vehicles. After electric cars gain critical mass, self-driving technology is the next frontier to conquer.
Why will they lead the way, instead of legacy U.S., European, or Japanese automakers? Many reasons. Firstly, they have the data. Rivals have to use simulations/test fleets to hone their AV technology. But not Tesla. Instead, they use real-world data, via the Autopilot features inside their vehicles.
Secondly, Tesla’s “emerging giant” status gives them an edge over legacy auto peers. With the coronavirus shutting down auto plants worldwide, over-leveraged car makers are fighting to survive. But Tesla has fewer of these burdens on its shoulders. Simply put, they have more “bandwidth” to move ahead with AV development.
The potential end result? The company crushes it with AVs as it did with EVs. While they dominate the space, legacy automakers will be playing catch up.
Ignore the Drama, Tesla Remains a Long-Term Opportunity
Despite the recent issues surrounding the company, I remain a long-term bull for the stock. Skeptics may cherry pick the negatives. But, I’m focused on the positives. All in all, Tesla is leaps and bounds ahead on electric vehicles. Rivals are just getting started.
It’s the same story with autonomous vehicles. Tesla is the clear leader in the space, and will continue to dominate for years to come. The competition? Woefully left behind.
Bottom line: consider TSLA stock a buy for the long haul. Scoop up shares on any dip.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
