Kevin O'Leary disagrees with Elon Musk that Tesla is overvalued. He thinks it's not a typical car company, but rather a data company.
Tesla’s stock (NASDAQ:TSLA) is one of the hottest assets in the world, up 82% year-to-date. While chief executive Elon Musk thinks his company’s shares are overvalued, serial entrepreneur Kevin O’Leary begs to differ. In a recent CNBC Halftime appearance, Mr. Wonderful emphatically said that:
No, [Tesla] is not overvalued.
Here are three reasons why the “Shark Tank” star is most likely right.
On the surface, it appears that Tesla is changing the world by producing environmentally-friendly electric vehicles that can compete against gasoline cars in terms of performance. But according to Kevin O’Leary, Tesla is not an auto company. It doesn’t have to compete with car manufacturers in Detroit because it is a data company.
Do not consider it a car company. It is a technology data company. [With] every mile driven globally, the data gets smarter, the resolution better. This company is all about the future of autonomous driving,
O’Leary’s assessment is correct. The company’s long-term moneymaker is its self-driving algorithm, which relies on data fed by Tesla vehicles on the road. Each Tesla acts as a data point that collects experiences, driver behavior, performance data, and other metrics. As the company receives more real-world data, the algorithms become smarter.
Elon Musk appears to have figured out the future of transportation, and he’s leaving his competitors in the dust.
If data is the new oil, then Tesla is the OPEC, USA, and Russia combined.
The Silicon Valley tech company champions a fleet of nearly a million vehicles. Every single one of them uploads data to Tesla’s neural network. No other car company in the world can compete with Tesla’s massive system of data collection points on the road.
The result is a trove of over 3 billion miles of self-driving data. By comparison, Google’s Waymo just hit 20 million miles of autonomous driving data. Tesla is in a league of its own.
The future of transportation is autonomous driving data. The company that can produce a fleet of safe self-driving vehicles will dominate the new industry.
According to ARK Invest, autonomous mobility as a service (MaaS) will make “point to point travel cheaper and more convenient.” Companies that offer autonomous ridesharing services will charge a fraction of what Uber and taxi services charge today.
Ark expects that people will eventually stop buying cars and rely on MaaS to serve their transportation needs. Enter Tesla and its data-rich neural networks.
Ark says that the autonomous taxi sector can grow to a $5 trillion market. Tesla is poised to dominate if not monopolize this industry.
It looks like Mr. Wonderful is right. Tesla is not overpriced.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. The writer does not own Tesla shares.
Last modified: September 23, 2020 1:54 PM