In addition to pioneering the electric vehicle market, Tesla (TSLA) is already in the vanguard of the soon-to-be-ubiquitous autonomous car. That’s why the stock is such a terrific buy for the long term, asserts Todd Shaver, editor of BullMarket.
Elon Musk has already single-handedly altered the automobile industry by forcing competitors to go electric. The first mover advantage provides Tesla a major head start over competitors in the EV market, and thinking ahead on self-driving cars will give it an equally powerful advantage in that industry as well.
Tesla has outfitted its current fleet with autonomous driving capability. That’s right, 85% of the cars the company sold in 3Q18 are already enabled to drive themselves. Once the software and regulatory approval comes online, Tesla can simply upload it to the hardware already in place. No other company can match that installed base or that lead.
Additionally, Tesla has recognized something that competitors have overlooked. It’s not who makes it first to market but who reaches critical mass. Self-driving cars are not a fad that will transform the landscape in a matter of months.
It’s going to take many years before enough people reach the right point on their comfort zone and vehicle trade-in cycle to make the autonomous world the status quo. And in that intervening time, whoever has the best track record will eventually win.
Since self-driving technology improves as more miles are driven, Tesla’s 1.5 billion miles of road tests are already ahead of everyone else. By the time drivers start making meaningful comparisons, this system will be the gold standard.
Meanwhile, a fantastic 3Q18 has turned into a real turnaround point here. Revenue jumped 70% from the prior quarter to $6.8 billion and the bottom line swung from $400 million in the red to $500 million in the black. Yes. Tesla is profitable, and the market has taken notice.
This is a stock that has endured many ups and downs but now the worst scenarios have permanently been disproved. The company is profitable at this scale. Much bigger scale is coming.
Musk doesn’t anticipate having to raise cash again. Expect the fun to continue for years to come as Tesla dominates two markets: EV and self-driving cars.
And we haven’t even talked about the home solar side. This stock was amazingly strong throughout the recent carnage, suggesting there is some seriously big money buying going on. Our $425 target price stands.
