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He tesla (NASDAQ: TSLA) stock price enjoyed a hectic November. It rose 38.1%, boosting the electric vehicle (EV) pioneer's market capitalization by more than $300 billion.
This was the largest market capitalization gain among major global companies. It was also Tesla stock's best month since January 2023 and lifts the five-year yield to around 1,442%. It's not bad at all.
What happened?
The biggest catalyst for the stock price in November was the election of Donald Trump. There were a few reasons for this.
First, CEO Elon Musk obviously campaigned for Trump during the election. Any victory for the Republican candidate would likely boost sentiment around Tesla stock.
Second, Trump has promised to impose tariffs on American imports, including foreign-made cars. This could boost Tesla's competitive position across the pond.
Furthermore, while the planned removal of green subsidies will pose challenges for all electric vehicle manufacturers, Tesla is much better positioned to withstand this impact than its loss-making rivals. We may see more EV startups go bankrupt.
Finally, in addition to tax cuts, Trump has promised deregulation, which could extend to autonomous vehicles.
Most of Tesla's valuation is now based on the successful rollout of a driverless robotaxi network. Some analysts place this market opportunity above $1.trn.
Extreme valuation
However, trading at a sky-high price-to-earnings (P/E) ratio of 94, the stock reflects this huge potential.
And this is where the risk lies. If Tesla cannot perfect fully self-driving (FSD) technology or continues to extend the timeline into the future, then the valuation is unsustainable.
Elon Musk has warned about this repeatedly in the past.
The value of the company is based mainly on autonomy. I think that's really the main driver of our value.
Elon Musk, June 2023
In the third quarter, more than three-quarters of the company's revenue came directly from the sale of electric vehicles.
<h2 class="wp-block-heading" id="h-ai-progress”>you have progressed
In early November, Musk also announced on x (formerly twitter) that Tesla's FSD technology was now “almost entirely ai“.
This means that it relies primarily on advanced neural networks and machine learning to process visual data and make driving decisions. It marks a move away from traditional sensor-based systems.
Over the weekend, the company began rolling out its latest update (FSD version 13) to employees and limited customers. This improves the miles traveled without human intervention by six times, according to Tesla.
The stock is up another 3.2% today (December 2) to $365.
My chosen action
The technological revolution that we are all experiencing is accelerating. Things we once considered science fiction (ai, self-driving cars, electric flying taxis) are progressing at remarkable speed.
Waymo One, what is it AlphabetGoogle's robotaxi service already makes more than 100,000 paid trips per week in Los Angeles, Phoenix and San Francisco. Human taxi drivers say this is disrupting their professions.
Waymo plans to expand to Atlanta and Austin in 2025, exclusively through Uber application.
In my opinion, Uber seems perfectly positioned to capture a significant portion of this market through its platform. That's why I bought shares of the ride-hailing giant earlier this year.
It is true that Tesla's planned robotaxis network potentially represents a threat in this regard. But Uber shares are much cheaper, so this is my preferred way to invest in the potentially transformative robotaxi market.
