Not long ago, Tesla (NASDAQ:TSLA) shareholders approved a massive $56 billion pay package for CEO Elon Musk. Will they eventually feel buyer’s remorse? Tesla shareholders should ponder this question in the second half 2024. For now, we give Tesla stock a “D” grade.
Bear in mind, Musk’s focus is distracted away from Tesla. He’s occupied with SpaceX, The Boring Company, Neuralink and xAI. It might not be easy for Tesla’s shareholders to sleep soundly at night if Musk is ultra-busy, unpredictable and prone to questionable decisions.
So, let’s talk about what Tesla and Musk have been focused on lately, and why the CEO’s ideas may end up falling flat.
Tesla’s Unproven and Strange-Looking SUV
Technically, Tesla’s Cybertruck is classified as an SUV. However, the Cybertruck is so strange-looking that it’s difficult to classify it at all, and the vehicle’s appeal may be limited.
To quote Shark Tank investor Kevin O’Leary, the Cybertruck has a “really ugly look.”
Furthermore, the Cybertruck is still unproven in its ability to generate huge sales. It will be challenging to ramp up Cybertruck sales because the vehicle’s price tag is nearly $100,000, while investors expected it to be around $50,000.
Moreover, it’s not cheap for Tesla to produce Cybertrucks. Yahoo Finance Senior Autos Reporter Pras Subramanian warned that if Tesla wants to hit its “$50,000 price tag, they’re going to have to keep driving down their industrialization costs.”
Surely, that’s easier said than done after a couple of years of elevated inflation and input costs for automakers. With Tesla’s U.S. EV market share dropping below 50%, Musk doesn’t need to take unnecessary risks with the unproven Cybertruck.
Musk Is Also Distracted by Humanoid Robots
Along with other unrelated business ventures and the Cybertruck, not to mention political involvements, Musk has yet another distraction. And, like the Cybertruck, it’s an unproven venture in terms of big sales.
We’re referring to Musk’s focus on humanoid robots. Musk wrote in an X posting, “Tesla will have genuinely useful humanoid robots in low production for Tesla internal use next year and, hopefully, high production for other companies in 2026.”
But then, Reuters pointed out that Musk “has a history of failing to fulfill bold promises to Wall Street.” For example, Musk told investors in 2019 that Tesla would be operating a network of ‘robotaxi’ autonomous vehicles by 2020.
So, don’t make any assumptions that Tesla will have humanoid robots in high production in 2026. Also, don’t jump to any conclusions that there will be strong demand for these robots. This business venture could end up being a major dud for Musk and Tesla.
Tesla Stock: Do You Really Know What You’re Investing In?
Unfortunately, many people who own shares of Tesla probably think they’re only investing in popular EVs. As it turns out, they’re also investing in the unproven Cybertruck vehicle model. Additionally, they’re taking a stake in the market for humanoid robots.
Beyond that, they’re taking a chance on a CEO in the driver’s seat who has made some “unusual” decisions. This doesn’t mean Tesla can’t succeed and grow with Musk at the helm.
It’s just food for thought, and something for overeager investors to consider. So, in light of Musk’s distractions and unproven business ventures, we’re assigning Tesla stock a “D” grade today.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.