Tesla Inc (NASDAQ:TSLA) sold off hard following a fourth-quarter earnings report that fell short of the market’s lofty expectations. Despite reporting better-than-expected revenue of $2.28 billion on the quarter, Tesla stock delivered an earnings loss much larger that the market anticipated.
As Tesla stock was already up more than 26% year-to-date headed into earnings, it’s not surprising that the stock sold off.
I’ve written many times about the dangers of investing in Tesla stock at its current market valuation.
Tesla’s 2017 run pushed the stock’s market cap to around $45 billion, roughly in line with that of Ford Motor Company (NYSE:F). It’s difficult to fathom such a high valuation for a company that shipped just 76,000 vehicles last year and burned through another $448 million in cash in Q4.
The market may have higher hopes for Tesla stock than any other stock on the market. But long-term TSLA bulls don’t care about Q4, or even 2017 for that matter. They aren’t just investing in an auto company. They believe Tesla Inc. will change the world.
The Tesla Stock Bull Case Is About Quality
Tesla stock bulls believe that it doesn’t matter how many cars the company delivers in the short term. They feel the autonomous driving technology that CEO Elon Musk is developing will make Tesla vehicles the best in the world in the next decade.
General Motors Company (NYSE:GM) has gotten a head-start on the long-range electric vehicle mass market. But TSLA appears to be on track to be the first to market with a fully-autonomous vehicle.
Last year, Elon Musk tweeted that Tesla had already driven 222 million cumulative autopilot miles. Those miles are extremely important because the precious data they provide, which allows for fine-tuning the technology. By comparison, Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Waymo driverless car has logged only about 2 million miles of data.
If Tesla is the first to market with a driverless car, its data advantage will quickly compound exponentially. That huge advantage could make it very difficult for competitors to catch up.
TSLA Stock Valuation Not an Issue
The scariest part about Tesla stock for most investors is…
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