Credits: finbold.com
The price of Tesla's stock is on the rise, but is it for good reason or is this just hype? Around 70 percent of Tesla’s market cap is now reliant on big ambitions around artificial intelligence, either self-driving cars or humanoid robots, which are nowhere near being mass produced and deployed.
Even though Tesla reigns supreme in the electric vehicle category, analysts have begun to grow more cautious. A good portion of the valuation of Tesla’s future is being factored in from the promise of functionality around a number of technologies. A good example would be FSD, or Full Self-driving, features that seem to be increasing levels of safety, but are not anywhere close to being capable of navigating our roads without any human involvement.
Then we have the humanoid robot, Optimus, which Elon has touted as the company's next game-changing product. It is still a prototype, and we do not yet have a timetable for when it may be a sellable product.
What is most concerning is that the stock price is still being tied to the assumption that these projects will work, if not work now, then very soon. At the valuation at which Tesla is trading, investors are betting on a future that is still a number of years away, while many unknown variables will unfold in the interim.
To summarize, Tesla's positioning is risky. Its stock price may be in the hands of Musk's ambition rather than any form of real-world evidence that these technologies are valid. Until real-world evidence presents itself, there is always a risk of a bubble popping.
