Tesla stock (TSLA) may be on a downward trend right now, but one bull sees the decline as a perfect buying opportunity.
“I’m a firm believer that this (stock) will go to $5,000 or $10,000 (long term) once people understand what Tesla is all about,” retail investor and Tesla shareholder Alexandra Merz told Yahoo Finance senior editor Brian Sozzi for his podcast “Opening Bid” (see video above or listen here).
Merz is a former financial advisor and current CEO of L&F Investor Services and no stranger to the electric vehicle (EV) space.
She has been an enthusiastic driver of various electric cars since 2014. Of all the electric cars she has come into contact with, her Teslas are the best and then some, she says. After test driving a Model 3, she realized that Tesla is more than just a car manufacturer – it’s also a technology company.
After liquidating other assets, she began buying Tesla stock and has since become a passionate advocate for the brand on Elon Musk’s X (formerly known as Twitter), where she initiates discussions about the brand with her over 100,000 followers under the name TeslaBoomerMama.
For Merz, Tesla shares remain undervalued for two main reasons.
First, the market is not properly pricing in the company’s profitability over time from the widespread adoption of its Optimus humanoid robots. However, there are doubters about these robots, including Meta’s former head of AI, Jerome Pesenti.
“Sometimes we have to call a spade a spade, right? I mean, have you ever seen this (robot) thing do anything? It’s bullshit,” Pesenti said at Opening Bid.
And second, Tesla’s artificial intelligence is a competitive advantage that can increase the company’s lead over competitors in the automotive sector such as General Motors (GM).
Ultimately, Merz believes that Cathie Wood’s long-term price target of $2,600 for Tesla stock (currently the most aggressive in the financial world) will prove to be conservative.
Despite Tesla’s supposed longer-term potential, investors like Merz are grappling with another short-term reality.
Tesla stock – often viewed as riskier than the overall market – has been dragged down by the recent crisis in the technology market.
According to Yahoo Finance, the electric car maker’s shares have fallen 20% in the past month DataThe S&P 500 lost about 6% during the same period, and the Nasdaq Composite lost 11%.
The wave of selling was triggered in part by the company’s lackluster second-quarter earnings report at the end of July, which included promises to launch cheaper electric vehicles in 2025.
“While both technology and execution risk appear to be substantially lower than once feared, expansion into higher volume, lower price segments appears to be more risky relative to demand, execution and competition. At the same time, valuation appears to price in upside associated with expansion into mass market segments that is well beyond our volume forecasts for Model 3,” JP Morgan analyst Ryan Brinkman said in a client note.
Brinkman rates Tesla shares as “underweight” (equivalent to “sell”).
The unpredictable Musk is also not exactly helping the mood towards Tesla.
Musk remains at odds with OpenAI CEO Sam Altman and has filed another lawsuit claiming that as an early backer he was misled about OpenAI’s mission.
On the political level, Musk supports Republican presidential candidate Donald Trump, a well-known critic of electric vehicles.
And Tesla has postponed its robotaxi event from mid-July to October 10, leading to speculation that the unveiling could be a disappointment.
As an avid investor, Merz follows this flood of information but takes it with caution. She says it makes sense to buy Tesla shares during the recent sell-off.
“As every Tesla investor knows, we also have ups and downs, because although we have a long-term vision, the share price can of course fluctuate from day to day,” said Merz.
Ultimately, it’s not “just a car company, (it’s an energy company and this whole technology company that) is going to enable us to have fully autonomous driving,” she said. “It’s also going to bring us all this AI in real life.”
Three times a week, Yahoo Finance Executive Editor Brian Sozzi hosts insightful conversations and chats with the biggest names in business and markets Opening bidYou can find further episodes on our Video Hub. See on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotifyor wherever you find your favorite podcasts.
In the following Opening Bid episode, Ford (F) CEO Jim Farley tells a story about his recent conversation with Elon Musk.
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