Key Morningstar Metrics for Tesla
- Fair Value Estimate: $250.00
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
A regulatory filing revealed Tesla TSLA CEO Elon Musk purchased roughly $1 billion worth of Tesla stock on Sept. 12. The firm’s shares are up 6% at the time of writing on the news.
Why it matters: An executive or board member buying shares of their own company can be a sign that they think the stock is undervalued. Musk’s purchase may mean he thinks the stock will be worth more in the future.
The bottom line: We see no reason to change our $250 fair value estimate for narrow-moat Tesla. Of our $250 fair value estimate, the majority comes from the firm’s artificial intelligence software and robotics.
- At current prices, we view Tesla stock as significantly overvalued, trading in 2-star territory and around 70% above our fair value estimate. We see a lot of optimism and upside already priced into shares for the company’s autonomous driving software.
Long view: Tesla’s robotaxi continues to expand testing to new cities and is testing later into the night. This marks progress from the initial tests a few months ago. However, a Tesla employee is still in each vehicle being tested, and the testing remains limited to a geofenced area.
- This is consistent with our view that Tesla will be successful in its autonomous driving ride-hailing product. We think this will also lead to greater adoption by Tesla owners of its autonomous driving subscription software.
- However, we think the robotaxi will not be ready for full service until 2028, two years after management’s guidance. We define full service as no Tesla employee being present in the vehicle and operations not limited to a geofenced area, consistent with management’s vision for the product.
