HomeBusiness1 billion reasons to keep an eye on the stocks

1 billion reasons to keep an eye on the stocks

One of the most volatile stocks is Tesla (NASDAQ: TSLA)a company that is a pioneer in electric vehicles (EVs) and a pillar in the sustainable energy movement.

While the S&P500 And Nasdaq Composite inches closer to record levels, Tesla can’t seem to find its mojo. Shares have tumbled 30% so far this year and the company’s prospects look bleak.

As usual, Tesla’s CEO, Elon Musk, gave investors a reason to cheer by distracting them with an update on the company’s autonomous driving progress.

A few days ago, Musk posted on X – the social media platform formerly known as Twitter – that Tesla’s full self-driving (FSD) technology has collected more than 1 billion kilometers of driver data. Let’s take a look at why this is important and what it could mean for the future of the company.

Enter the Dojo

Tesla vehicles are equipped with cameras and sensors that continuously collect various data. This includes maps of neighborhoods and cities, driving conditions in different areas and more.

This data is in turn fed directly back to a supercomputer called Dojo, the neural network that processes all this driver data and helps refine the company’s self-driving software.

Tesla isn’t the only company pursuing autonomous driving. General engines And Alphabet have made significant investments in the technology. While the latter’s Waymo subsidiary has made notable strides in self-driving capabilities, General Motors has faced a number of setbacks lately.

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Tesla is seen by many on Wall Street as a leader in the field of autonomous driving. The company has more data than its competitors and as such has been able to make major changes to FSD over the years.

Yet the idea of ​​self-driving cars really seems like science fiction. While the prospects are intriguing, is autonomous driving a reality?

A person in a self-driving car

Image source: Getty Images.

How close is fully self-driving?

There are a number of key selling points for autonomous driving. First, there are ride-hailing platforms such as Uber or Lyft could theoretically benefit from the technology as it could replace the cost of human drivers in the long run. The same idea applies to delivery services, including DoorDash or Instacart.

If a company can crack the code for self-driving vehicles at scale, it can license the technology to automakers. Next, fleets of robotaxis could dominate the roads and have a significant impact on the labor market.

Around the same time that Musk posted that his company has collected more than 1 billion miles of FSD data, he also turned to X to proclaim that robotaxis could be here soon. While it’s not entirely clear whether Tesla’s robotaxis will be on the road this year, Musk’s cryptic social media posts suggest something big could be in store this summer.

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He has previously used social media to tease certain ideas or updates about Tesla. Furthermore, his intense management style has also contributed to the company missing deadlines on numerous occasions.

Are Tesla shares a buy now?

While the prospects for FSD and robotaxis are exciting, investors should avoid investing in the stock amid speculation that Tesla will unveil a new product or service in this category later this year.

Instead, it’s more important to zoom out and see the bigger picture. While the company’s core EV business is huge, growth has stalled over the past year. This is not surprising, as the economy has been plagued by unusually high inflation and rising interest rates. As a car company, Tesla will be sensitive to high interest rates.

Nevertheless, with consistent free cash flow generation and $29 billion of cash on the balance sheet, Tesla has done a fantastic job of investing in high-growth opportunities. Indeed, the company’s activities in artificial intelligence (AI) are being overlooked while other mega-cap tech players are coming into the spotlight.

TSLA PS Ratio ChartTSLA PS Ratio Chart

I wouldn’t be surprised if we get the first glimpse of robotaxis this summer. But the bigger idea is that Tesla is collecting more data and developing autonomous driving software faster than the competition. So in the long term, I think the company is better positioned than its peers to benefit from self-driving at the right time.

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With a modest price-to-sales ratio of only 6.2, the share is well below its ten-year average and is considerably lower than the highs of a few years ago. While FSD’s public debut remains somewhat of a mystery, I still see now as an attractive time to pick up shares in Tesla.

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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet and Tesla. The Motley Fool holds positions in and recommends Alphabet, DoorDash, Tesla, and Uber Technologies. The Motley Fool recommends General Motors and recommends the following options: In January 2025, $25 would appeal to General Motors. The Motley Fool has a disclosure policy.

Big News for Tesla Investors: 1 Billion Reasons to Watch the Stock was originally published by The Motley Fool

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