Tesla (TSLA) stock may be in decline right now, but a perennial bull considers the dip a perfect buying opportunity.
“I am very convinced that this [stock] goes to $5,000 or $10,000 [long-term] once people understand what Tesla is,” Alexandra Merz, a retail investor and Tesla shareholder, told Yahoo Finance’s executive editor. Brian Sozzi for his opening bid podcast (watch the video above or listen here).
Merz is a former financial consultant and current CEO of L&F Investor Services, and knows the electric vehicle (EV) space well.
Since 2014, she has been behind the wheel of various electric vehicles with enthusiasm. Of all the EVs she’s come into contact with, her Teslas are all that and then some, she says. After testing a Model 3, she realized that Tesla was more than just a car company – but also a technology company.
She began buying Tesla shares after liquidating other assets and has since been a fierce advocate for the brand on Elon Musk’s X, formerly known as Twitter – where she can be found leading discussions about the brand for her 100,000+ followers. TeslaBoomerMama.
For Merz, Tesla shares remain undervalued for two main reasons.
Firstly, the market is not adequately evaluating the company’s purchasing power due to the widespread adoption of its Optimus humanoid robots over time. Although there are doubts about these robots, including Meta’s former head of AI, Jerome Pesenti.
“Sometimes we have to call it what it is, right? I mean, have you seen it? [robot] something do something? It’s nonsense,” said Pesenti in the opening shot.
And two, Tesla’s AI is a competitive advantage that could widen its gap with automotive rivals like General Motors (GM).
Ultimately, Merz believes Tesla colleague Cathie Wood’s $2,600 long-term price target for Tesla stock (currently the most aggressive in the financial world) will prove conservative.
Despite Tesla’s claimed long-term potential, investors like Merz are dealing with a different reality in the short term.
Tesla shares – often seen as riskier than the broader market – have been dragged down by the recent technology meltdown.
The EV maker’s shares plunged 20% last month, according to Yahoo Finance data. The S&P 500 fell about 6% during the same period, with the Nasdaq Composite falling 11%.
The sell-off was triggered in part by the company’s weak second-quarter earnings report in late July, which included the promise of cheaper EVs by 2025.
“While technology and execution risk appear substantially lower than feared, expansion into higher-volume, lower-priced segments appears fraught with greater risk regarding demand, execution, and competition. Meanwhile, valuation appears to be pricing in the upside related to expansion into mass market segments well beyond our volume forecasts for the Model 3,” JP Morgan analyst Ryan Brinkman said in a client note.
Brinkman holds an underweight (equivalent to sell) rating on Tesla shares.
Also, what doesn’t help sentiment about Tesla is the mercurial Musk.
Musk continues to feud with OpenAI CEO Sam Altman, again filing a lawsuit claiming he was misled about OpenAI’s mission as an early backer.
On the political front, Musk supported Republican presidential candidate Donald Trump, a known critic of EVs.
And Tesla postponed its robotaxi event from mid-July to October 10, sparking speculation that the opening could be a disappointment.
As an enthusiastic investor, Merz is following this flood of information but approaching it with caution. She says buying Tesla shares in its latest sale makes sense.
“As any Tesla investor knows, we have ups and downs because although we take a long-term view, obviously the day-to-day share price can fluctuate,” Merz said.
Ultimately, it is not “just a car company, [it’s an energy company and this whole tech company that’s] it will bring us fully autonomous driving,” she said. “It will also bring us all this real-life AI.”
Three times a week, Yahoo Finance Executive Editor Brian Sozzi fields of conversations full of insights and chats with the biggest names in business and markets in Opening bid. Find more episodes in our video center. Watch on your preferred streaming service. Or listen and subscribe to Apple Podcasts, Spotifyor wherever you find your favorite podcasts.
Below Opening bid episode, Ford (F) CEO Jim Farley tells a story about a recent interaction he had with Elon Musk.
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