The Three Letters That Tesla Stock Investors Need to Focus On

Tesla (NASDAQ: TSLA) faced a tough first-quarter earnings report this week, with challenges like the Red Sea conflict, an arson attack at its Berlin factory, and the ramp-up of its updated Model 3 impacting costs and performance. The company reported a 9% decline in deliveries and a 9% drop in revenue to $21.3 billion, missing analyst estimates.

Despite the disappointing results, Tesla stock surged after hours, closing up 13.3%. CEO Elon Musk shifted focus to future products, particularly on achieving full self-driving (FSD) capabilities. Musk emphasized Tesla’s potential in AI and robotics, rather than just as an automaker.

Musk’s vision for FSD includes enabling Tesla owners to lease out their cars, creating a new business model for the company. He believes Tesla is in a prime position in the autonomous vehicle race, with over 5 million cars on the road that can be upgraded for FSD when ready.

While Musk’s optimism is infectious, it’s important to note that Tesla faces competition in the AV space from companies like Alphabet’s Waymo, GM, Ford, and others. Consumer Reports even ranked Ford’s BlueCruise AV technology ahead of Tesla’s last year.

Investors should consider the risks and rewards of investing in Tesla stock, as the company’s valuation already reflects high expectations for its potential in FSD. Musk’s bold claims should be taken with caution, as the market for autonomous vehicles is competitive and rapidly evolving.