Has Wall St fallen out of love with Tesla?

Elon Musk is renowned for his ambitious ventures into futuristic technologies, but despite his grand visions, Wall Street remains cautious about the electric vehicle giant.

Investor Gary Black recently shed light on the reasons behind this skepticism, particularly concerning Tesla’s artificial intelligence endeavors, in a tweet posted on February 24.

Black pointed out that Tesla does not disclose results for its AI businesses, which include initiatives like robotaxis, Full Self-Driving (FSD) licensing, and projects such as Optimus and Dojo.

This lack of transparency makes it challenging for institutional investors to accurately assess the value of these ventures, unlike other companies like NVIDIA, which provide detailed insights into their AI-related operations.

Tesla Model S Bluefire at Tesla Servicecenter Bern Switzerland @ Unsplash

Largely invisible

He emphasised the difficulty in assigning a value to something that remains largely invisible due to the absence of regular disclosure from Tesla.

Black highlighted the contrast between evaluating Tesla in 2017-2018, where financial forecasts could be made based on transparent earnings streams, and the present situation, where assessing the potential of Tesla’s AI ventures feels more speculative and less grounded in financial discipline.

While some argue that analysts and investors can model Tesla’s AI ventures independently, Black countered by citing examples of overly optimistic projections, labeling them as “making up numbers.”

He stressed the need for better disclosure from Tesla if the company wants Wall Street to accurately model its AI businesses.

Black’s remarks underscore a broader issue facing Tesla and other tech companies pioneering cutting-edge technologies.

While Musk’s bold vision captivates many, investors demand clear visibility into the financial prospects of these ventures to make informed decisions.

Without adequate disclosure, skepticism persists, hindering Tesla’s ability to garner full confidence from Wall Street.