Is this an unmissable opportunity to buy Tesla stock?
Tesla (NASDAQ:TSLA) stock is approaching a critical juncture as its long-promised autonomous driving ambitions finally face real-world tests. With the first supervised robotaxi fleet now launched in Austin, and broader autonomous rollouts on the horizon, investors are weighing whether this is a rare entry point or a moment to stay clear.
Self-driving developments
Tesla’s June 2025 debut of a driverless Model Y fleet in Austin represents a milestone for its Full Self-Driving (FSD) vision. The company is betting that robotaxis and AI-driven mobility will become core revenue streams. Management hopes to hit $75bn from robotaxi revenue by 2030.
However, the initial rollout is limited. A dozen cars, in a single city, with human supervision and hand-picked passengers. Scaling to millions of vehicles, as CEO Elon Musk envisions, will require overcoming significant regulatory, technical, and competitive hurdles. It may prove to be a long process.
Questioning the valuation
Despite the technological promise, Tesla’s recent fortunes haven’t been great. Passenger EV sales — which still make up 72% of revenue — are declining, dragging down overall results. In Q1 2025, revenue fell 9% and GAAP earnings plunged 71% year on year. This has contributed to Tesla’s extreme valuation.
Tesla’s price-to-earnings (P/E) ratio is not only far above the consumer discretionary sector but also dwarfs tech giants like Nvidia, Microsoft, and Apple, which average a P/E of 35.4. For Tesla’s P/E to align with these peers, its stock would need to drop by over 70%.
| Metric | Tesla (TTM) | Sector median | % Diff. to sector |
|---|---|---|---|
| P/E (Non-GAAP) | 132.95 | 16.03 | +729% |
| P/E (GAAP) | 170.39 | 19.58 | +770% |
| Price-to-sales | 9.97 | 0.98 | +914% |
| Price-to-book | 12.85 | 2.14 | +501% |
If autonomy delivers and if it doesn’t
Bulls argue that if Tesla’s FSD and robotaxi initiatives succeed — achieving mass adoption and regulatory approval — the current valuation could look cheap in hindsight. Coupled with expansion into energy and AI, Tesla could indeed transform into a broader tech conglomerate, justifying its premium.
However, sceptics point to fierce competition (notably from Waymo and Chinese rivals), ongoing regulatory probes into FSD safety, and the operational complexity of scaling robotaxis.
Tesla’s declining core business and reliance on unproven future revenue streams make its current valuation look especially precarious. If EV sales continue to slide or robotaxi adoption lags, significant downside is possible.
It’s a hunch
Tesla’s competitive advantage in autonomy is its scale and its advanced camera-led driving technologies. And trust me, I really want it to succeed. However, for now, the stock will remain at a crossroads until the company’s technology is either proven or fails.
And all this suggests that an investment today would be speculative. Nobody knows that Tesla will succeed. It would simply be a hunch. Moreover, the current valuation leaves little margin for error. For investors, this is a high-stakes moment. It’s potentially unmissable, but fraught with risk. I’m not considering an investment today. The risks are too great. And that’s simply not how I invest.
The post Is this an unmissable opportunity to buy Tesla stock? appeared first on The Motley Fool UK.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon, Microsoft, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
