Investors seem to have soured on it Tesla (NASDAQ:TSLA), especially in the last month. Major electric vehicle stocks have suffered from demand for EVs. Additionally, the perception of a shift in priorities in some parts of the business may give investors pause. As a result, the stock is selling at a 58% discount to its 2021 high.
However, these lower prices are often a buying opportunity, especially when companies can overcome these challenges. This is what will happen with Tesla, and the growing business can boost the recovery.
Tesla’s struggles may be temporary
Indeed, the decline in EV sales has hurt Tesla, and many investors are worried about competition from Chinese EV makers. BYD. Competition and price cuts have squeezed gross margins, which has hurt some Tesla stock investors.
Still, Tesla is not ignoring the problem. To spur demand, Tesla is offering 0.99% financing to Tesla Model Y buyers, which will help move more inventory. In addition, even though Tesla has backed away from its goal of producing 20 million cars per year by 2030, it seems to be aiming to increase production. The company says it wants to “displace fossil fuels by selling as many Tesla products as possible.”
To that end, Tesla reiterated in late April that the company is not abandoning plans for low-cost EVs. Admittedly, the company has yet to announce whether it will be the Model 2 or a cheaper version of the current model. However, having a low-cost model available dramatically increases Tesla’s chances of continuing to increase sales volume, which should reassure nervous investors as its plans become clearer.
How robotaxi could replace Tesla
Still, for all the focus on cars, the product that could be Tesla’s next major revenue driver (pardon the pun) is robotaxi. While a fully autonomous platform is not yet a reality, the latest version of Tesla’s self-driving platform has made great strides.
In addition, investors may be anxiously waiting for August 8, the day CEO Elon Musk has set for the release of robotaxi.
This includes Cathie Wood and the team at Ark Invest, which predicts a $2,000 per share price target for the stock in 2027. The increase would be an 11-fold increase in the share price in three years.
Investors have reason to take this prediction seriously. In 2018, Wood proposed a dividend-adjusted $267 per share target when the stock traded slightly above the $20 per share dividend-adjusted price. Tesla will exceed the price forecast in the 2021 bull market.
Furthermore, to put the stock price in perspective, the current market capitalization of about $555 billion will grow to approximately $6.4 trillion, roughly twice the size of the current market capitalization leader. Microsoft.
Invest in Tesla
Tesla has set lofty goals amid more recent struggles, but history says Musk and his team may be able to meet their goals, which could lead to a stock recovery and take Tesla to a record high.
Yes, Tesla has struggled in recent years as it has struggled to turn itself around, and rising competition, lower gross margins, and a lack of clarity about the future of its cheaper vehicles appear to have disappointed shareholders.
However, rising production and a viable robotaxi platform could transform the company. If Tesla can meet or even come close to that target, it can not only return to its top level, but also surpass it.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions and recommends BYD, Microsoft, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
1 S&P 500 Great Stocks Down 58% to Buy and Hold Forever was originally published by The Motley Fool
