Rob Wertheimer, an analyst at Melius Research LLC, has emerged as the latest Wall Street bull backing Tesla Motors (TSLA.US). This analyst, who recently initiated coverage on the electric vehicle manufacturer, notes that the company possesses the potential to disrupt the automotive industry and qualifies as a "must-hold stock," though finding reasonable support for its trillion-dollar valuation remains a significant challenge. The analyst believes Tesla Motors can rapidly improve and scale the deployment of autonomous vehicles, with autonomous driving representing the first major application of artificial intelligence (AI) in the physical world. He assigned a "buy" rating with a $520 target price.
"The transformative moment has arrived," Wertheimer wrote in a client report on Monday. "The risk of not positioning in Tesla Motors is equally substantial, and we cannot find many investment targets comparable to Tesla Motors."
However, since Tesla Motors' autonomous driving technology has not yet achieved full autonomy and the timeline for technological maturity remains unclear, valuation assessments still carry a "speculative" nature. Additionally, the development trajectory of the company's robotics business, such as the Optimus humanoid robot, is even more difficult to predict.
Tesla Motors' valuation has long been a focal point of investor debate—everyone continues to assess whether Tesla Motors is an electric vehicle manufacturer or a potential AI giant. As for CEO Elon Musk, he has recently been attempting to move beyond the "electric vehicle" narrative framework, instead focusing on autonomous driving. He has even stated that 80% of Tesla Motors' future business revenue will come from Optimus robots.
To a large extent, Tesla Motors investors have endorsed Musk's vision. Driven by AI prospects and market enthusiasm brought by Musk, Tesla Motors' stock price gained 33% in September. However, as third-quarter vehicle deliveries fell short of expectations and the long-awaited "affordable electric vehicle" was ultimately priced above expectations (failing to be truly "accessible"), the stock's upward momentum stalled—a signal indicating that if core automotive business sales weaken, Tesla Motors may struggle to support its ambitious AI dreams.
Wertheimer stated that his target price is based on an assumption that Tesla Motors will successfully develop truly fully autonomous vehicles, which will enable it to capture a significant share of the ride-hailing market and further expand business scale. However, the analyst also noted that a significant portion of Tesla Motors' market value comes from "products that do not currently exist."
He wrote in the report: "We assign a 'buy' rating because we believe that as more investors, including retail investors, gradually recognize the revolutionary nature of the Full-Self-Driving experience, market attention to this technology will continue to increase."
