Do you have 15,000 dollars? Why Tesla Stock Still Has the Makings of a Generational Wealth Builder

Do you have 15,000 dollars? Why Tesla Stock Still Has the Makings of a Generational Wealth Builder
Do you have 15,000 dollars? Why Tesla Stock Still Has the Makings of a Generational Wealth Builder

tesla (NASDAQ:TSLA) Shares are down 14.5% this year because the company has yet to release a series of updates on its most important near-term catalyst: its robotaxi launch. To date, the only unsupervised robotaxis are in a limited area of ​​Austin, Texas, and Tesla is nowhere near the type of rollout that CEO Elon Musk had previously envisioned for the company.

Still, that doesn’t change the fact that the stock has considerable potential if a commercial robotaxi service starts to scale. And if you can finally make this ambitious future a reality, then a modest investment in Tesla stock today could turn into life-changing wealth within a few decades.

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Growth stocks typically have a high earnings multiple because the market values ​​them based on their earnings potential rather than their current earnings, and Tesla is definitely still one of those growth stocks.

Image source: The Motley Fool.

While it’s understandable that some investors continue to focus on its delivery numbers, especially since that’s where the data and the company’s tangible products and services are, the reality is that robotaxis are its future.

However, the growth potential that is aspired to is not usually free of high risks. In most cases, companies hoping to bring game-changing proprietary technology to the world face numerous challenges. These risks include funding issues, establishing market presence, convincing customers to trust and adopt your technology, protecting your intellectual property, obtaining regulatory approval, and ensuring your technology is scalable and adaptable in the market. The list goes on.

But here’s the thing. What if a company is about to launch an innovative technology and is already a clear market leader in its field, has no problems with financing, has an installed base of customers that far exceeds that of any rival, has enormous amounts of data about its technology that dwarf its peers, offers a highly cost-competitive service, and is showing progress in working with regulators to obtain approval for its technology?

It’s an unusual combination, but it’s the investment proposition facing Tesla investors right now.

Tesla is not only the dominant force in electric vehicles (EV) with a market share of more than 54% in the US, but it is also profitable. That matters because colleagues like it Ford, general motorsand volkswagen They are aggressively reducing electric vehicle models, clearing the field for Tesla.

The company’s powerful presence in the market and more than 9.2 billion miles driven with supervised full self-driving (FSD) software ensure that there are no problems for the company to gain recognition in the market. Additionally, Wall Street analysts expect Tesla to end 2026 with more than $28 billion in net cash, even after aggressively increasing capital spending to support battery development, lithium refining and production of its dedicated robotaxi, Cybercab.

Musk has consistently outlined expectations that the Cybercab will cost less than $30,000 and have an operating cost of about $0.20 per mile. By comparison, the cheapest Waymo models are estimated to cost between $75,000 and $100,000.

All of these arguments are true, but most of them were also true a year ago. Meanwhile, the robotaxi rollout is moving slowly and investors still hope the service will expand beyond Austin and the San Francisco Bay area.

The slow rollout is behind the stock’s decline this year, but that doesn’t diminish the long-term potential for a massive stream of recurring revenue from its robotaxi plans. Tesla is a speculative stock that doesn’t suit most investors, but that doesn’t mean it lacks substantial long-term potential to reward patient investors.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.

Do you have 15,000 dollars? Why Tesla Stock Still Has the Marks of a Generational Wealth Builder was originally published by The Motley Fool

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