Sell signs for Tesla Inc. have been abundant. It is seeing a slowdown in electric car sales throughout the United States, a possible sales halt in California, and a decline in market share in China and Europe.
However, this hasn't stopped investors from being enthusiastic about its attempts to build driverless vehicles and artificial intelligence.
For the first time this year, the carmaker's shares have set a record after rising 25% from a low on November 21. Additionally, the company has surpassed the Bloomberg Magnificent Seven Index, which has increased by less than 6% within the same time frame.
Elon Musk's ambition to make Tesla a robotics and artificial intelligence (AI) powerhouse two rapidly developing technologies that have propelled global stocks to all-time highs is the main source of optimism.
Analysts have praised the company's move into driverless vehicles, with some predicting that Tesla will be a "game changer" in this area.
According to Moritz Kronenberger, a portfolio manager at Union Investment, "Tesla is showcasing that they are close to monetizing on AI," citing the company's plans to create robots and self-driving taxis. "It has become increasingly a possible AI winner with the recently revealed narratives."
Among Musk's other plans is a possible IPO for SpaceX, a rocket and satellite manufacturer that he claims has been merging with Tesla.
Waymo, Alphabet Inc.'s autonomous self-driving division, is in talks to raise around $15 billion at a valuation close to $100 billion, which is also expected to increase sentiment toward autonomous vehicles.
According to Jacques Aurelien Marcireau, co-head of equities at Edmond de Rothschild Asset Management, "it's clearly SpaceX: the beauty of Tesla is that retail investors amalgamate everything." "Despite the very low real linkage in terms of economic interest, investors tend to use Tesla as a proxy for the Musk Galaxy."
However, Tesla's commercial prospects still present a number of challenges. If the firm doesn't alter its marketing strategies that allegedly mislead customers about its driver-assistance technology, its sales in California might be halted for 30 days.
In the meantime, investors were disappointed by the most recent quarterly results, which showed that a record quarter for car sales was weakened by rising prices.
According to Karen Kharmandarian, senior equities investment manager at Thematics AM, any good news in the near future is also reflected in Tesla's high values.
According to statistics gathered by Bloomberg, the company is trading at an astounding 223 times anticipated earnings, significantly higher than the five-year average of 94.
The price-to-earnings ratio for the larger Bloomberg Magnificent Seven Index is 31. Fares Hendi, portfolio manager of Societe de Gestion Prevoir, stated, "I'm definitely not a buyer: the multiples are just crazy with earnings that keep on disappointing."
