What is Tesla? (TSLA) Some people will tell you that it’s a car company. And they’re not wrong. After all, for many years, Tesla practically owned the Electric Vehicle space that it invented.
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New trading tool for TSLA bearsHowever, other people will tell you that Tesla is not a car company. It’s more of a technology innovator. It’s a company that gained success with one product, EVs, before setting its sights on something bigger: Elon Musk’s vision.
Like Apple (AAPL). For many years, it was a computer company. Today, however, 60% of the company’s revenues come from the iPhone. Just 6% come from computers. Apple, too, had a visionary leader in the form of Steve Jobs.
Ed Ponsi is one of those people who believes that Tesla is an innovator, rather than a car company. And he thinks that TSLA shareholders will be richly rewarded for believing in Elon Musk’s vision.
This week, I had the opportunity to sit down with Ed and discuss Tesla. We recorded the video and posted it to our YouTube channel. You can watch it here. However, I also posted it, along with the transcript, on TheStreet Pro, where I asked, “Is Tesla’s Valuation Ludicrous? Or is the Stock About to Go Plaid?” There, our subscribers can leave comments or ask questions that both Ed and I will respond to.
Today, I’d like to dig in and share what I learned from talking with Ed about Tesla, as well as other factors you should know if you either own or are thinking about owning shares of Tesla.
It’s All About Elon
If you’ve been reading my articles here on TipRanks, you’ll know that I’m not bullish on Tesla. That’s why I reached out to Ed. I always want to understand the point of view of people I disagree with. And Ed’s case is compelling.
Ed says that Tesla’s bears are analyzing it like a car company. Sure, it makes cars today, but in the future, Tesla will be a robotics and AI company. He says that FSD, Full Self Driving, is the bridge between today’s Tesla and tomorrow’s Tesla. FSD turns the car into a robot. And robotics is the future. Similarly, Tesla’s upcoming Optimus robot will be the home assistant that could do anything from cutting your hair to repair your roof, saving money and time.
AI is the key. Musk’s companies are experts in AI. They have the data and software they need in order to make inanimate objects into moving and interactive robots.
Musk’s other businesses are all synergistic with his vision for Tesla. xAI is the AI provider that offers the brainpower. Tesla is a leader in battery technology that’s used not only in their cars, but in SpaceX. It’s not a far leap to put those batteries into an earthbound robot that’s connected, via Starlink satellite, to the data sources it needs to run.
Optimus robots aren’t expected before 2028. But another robot, the Robotaxi, is already testing on city streets and is expected to start generating revenue next year.
SpaceX, X, xAI, Starlink, The Boring Company, Tesla. Each of these companies offers a key part of the puzzle that is Elon Musk’s vision. Combined, they link up to create a future that looks like science fiction but is on the verge of becoming fact.
And Musk has a history of combining his companies. SolarCity was merged into Tesla years ago, to the great benefit of those shareholders. More recently, the microblogging platform X was merged into xAI. There’s no reason that Musk couldn’t do the same with Tesla and the component companies he needs to build Optimus.
Musk could dominate the robot industry, and nobody really knows how big that industry might be.
But Tesla Shares Are Really Expensive
In our conversation, Ed said that there’s no realistic way to value Tesla. It’s not a car company, so those comparisons aren’t relevant. It’s a robotics company, and there aren’t any competitors with the vision and resources that Tesla offers. So, how do you value it?
Elon Musk believes that Tesla will be worth $10 trillion. In fact, Elon has substantial skin in the game, having secured a $1 trillion pay package if he can take Tesla’s market cap over $8.5 trillion.
Tesla shares are currently trading around $350. If Musk hits his $8.5 trillion target, that’s a 740% gain, and shares would trade around $2500 each. If Musk is only half right, shares will quadruple to around $1250. So, Ed feels that this isn’t an all-or-nothing bet. Musk can be partially right, and investors will win.
Still, with Tesla pivoting from auto production to robotics, I can’t help but feel that this company is the world’s largest and best capitalized startup. And there’s lots of risk with any startup. The Venture Capital crowd that invests in startups tends not to overpay. And, with Tesla trading at 430x trailing earnings and 14x trailing revenues, that’s expensive.
In other words, Musk could be 100% right, his Optimus robot could be an enormous success, and investors could still lose money simply because they overpaid for shares.
So, rather than analyzing Tesla like a car company, I looked for other companies with comparable valuations in the technology and communications spaces. AI companies like Palantir (PLTR) popped up. That stock is trading at 259 times earnings. Still insanely expensive, but less so than Tesla. Tesla is priced for perfection.
Risks, Including the SpaceX Effect
Overpaying for Tesla shares is an important risk, but it’s not the only one. What if something happened to Elon Musk? His loss is arguably a bigger risk than the company’s valuation. Without him, will his vision be realized? Will Tesla revert to being a car company?
Later this year, SpaceX is expected to IPO. It will be the largest offering in history. And it could take some liquidity from Tesla. In fact, it could take some liquidity from all stocks, since it might be priced at over $1 trillion. Some investors might sell Tesla shares to fund their SpaceX purchases. After all, if Musk’s businesses are all interrelated, does it make sense to be overweight Musk?
Watching Earnings Next Week
Tesla’s Q1 earnings are expected next week, on April 22nd. While many people will be watching to see what earnings and revenues look like, I get the sense that Ed isn’t worried. After all, he’s looking five to ten years into the future.
Instead, Ed noted in “5 Things for Tesla Investors to Watch With Earnings on the Horizon” that he’ll be watching to learn more about the following:
- FSD: The latest update is already rolling out to testers. Is it meeting expectations for performance?
- The Tesla Roadster: Tesla began accepting deposits for this one in 2017. It’s 2026 now, and Musk has teased that its release is imminent. But will it be the halo car many are hoping for?
- Optimus: The third generation of robots is almost here. Investors will want to know if the technology is on track.
- Cybercab: the fully autonomous taxi is on the roads now, and investors will want to know if production is ramping up.
- Terafab: This joint venture of SpaceX, Tesla, xAI, and Intel aims to produce 1 Terawatt (1 trillion watts) of AI compute capacity per year.
Final Thoughts
I learned a lot from our discussion, and I hope you tune in to watch it on YouTube or at TheStreet Pro. But I’m still skeptical. You see, I already own Tesla, and you likely do, too. The company makes up around 2% of the S&P 500. So, do I need to own any more shares?
Besides, it’s a risky play. If an investment is to be worthwhile, Tesla will have to scale the robot business to be many times larger than the car business very quickly. The company sold 1.6 million cars in 2025. It’s unlikely that a robot will cost as much as a car. So, Tesla would have to sell many millions of robots every year in order to justify the current price of Tesla, let alone Musk’s target of $8.5 trillion. Of course, there will be add-ons. Perhaps a basic Optimus could only do the dishes, while the handyman version would cost thousands more. Who knows?
But still. It comes down to Musk’s vision. You’re investing in a man. And that’s risky. Since I already own Tesla via index funds, I don’t see how buying more can improve my portfolio. In the end, whether to buy shares in Tesla right now comes down to how much Musk you want in your portfolio. How much Musk is too much?