Wall Street Doesn’t Know If Tesla Is A Car Company

Is Tesla a car company or a tech company? It’s a question not even analysts on Wall Street can agree on. CEO Elon Musk seems to split the difference between the two, and it’s hard to argue the cars his companies build aren’t more tech-forward (for better or worse) than most other cars currently for sale.

Tesla Had A Very Interesting Week

This confusion over what to make of Tesla and its products has been reinforced by the upcoming (in theory) announcement of Tesla’s Robotaxi on October 10. Whether or not that happens is anyone’s guess, but Musk feels it’ll be the most important day for Tesla since the Model 3 was introduced, Yahoo! Finance reports.

Anyway, there are some competing theories from Wall Street analysts on what exactly Tesla is as it gears up for a new and significant chapter in its life. Here’s their argument for Tesla being a car company, according to Yahoo! Finance:

On Tuesday, D.A. Davidson analyst Gil Luria announced he was expanding his coverage of Big Tech to include Meta (META) and Alphabet (GOOG, GOOGL) (he already tracked Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Nvidia (NVDA)), placing them all under the common theme of “compute.”

Close readers might note that the list is a magnificent six of Big Tech — not seven.

“If it looks like a duck (>90% of revenue from cars) and quacks like a duck (>90% of profits from cars) it might just be a duck (a car company),” Luria wrote in his note. He added, “Don’t @ me,” no doubt aware of the troll storm that can follow any whisper of Tesla criticism.

Luria elaborated in an interview on Yahoo Finance, noting that while there may be big artificial intelligence investments in the Musk-verse, “the player here isn’t Tesla, it’s Elon Musk.”

As I said, not everyone agrees, as Yahoo! Finance explains:

That same day, Edison Yu of Deutsche Bank weighed in on Tesla with a very different take: “At the core, we do not see Tesla as an automaker but rather a technology platform attempting to reshape multiple industries, deserving of a unique type of valuation framework,” he wrote.

That framework resulted in a $295 price target from Yu, who named Tesla his top pick among autos.

Musk has previously said that investors shouldn’t put their money behind Tesla if they don’t see it as more than just a car company, Yahoo! reported. As it points out, people seem to be heeding that warning, and because of that the stock price is down nearly nine percent. Ouch.