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Tesla ((TSLA) CEO Elon Musk says the electric vehicle giant has launched a ride-hailing service in the San Francisco Bay Area. Shares of the automaker are still inching down in morning trading on Friday.
Expectations are for TSLA’s announced offering to be a chauffeur-style service and not a robotaxi service given it doesn’t yet have authorization for its driverless vehicles in California.
At the time of writing, Tesla stock is down more than 15% versus its high set in the final week of May.
Why Is It Significant for Tesla Stock?
TSLA’s newly launched ride hailing service in the San Fracisco Bay Area marks a significant leap toward its long-term commitment to dominating the robotaxi space.
While not yet autonomous because of regulatory constraints, it allows the electric vehicle company to test real-world logistics, gather user data, and build brand presence in a competitive market dominated by Uber (UBER) and Waymo.
The rollout signals potential future revenue streams and operational scalability, laying groundwork for broader autonomous deployment once approvals are secured, which could drive TSLA share price upside in the long run.
Is It a Strong Enough Reason to Buy TSLA Shares?
According to Wolfe Research analysts, while some narratives sure are improving for Tesla shares, especially as management executes on its AI ambitions, the current setup is not attractive enough to warrant an investment.
In its latest research note, the investment firm agreed that the company’s auto segment challenges are being offset by strength in its energy business, but said near-term estimates are rather inflated.
TSLA stock is currently going for a forward price-earnings (P/E) ratio of nearly 270x, which is not inexpensive by any stretch of the imagination.
However, the electric vehicle giant has recently inked a multibillion-dollar chip supply agreement with Samsung Electronics, reinforcing a commitment to its AI future that could justify its premium valuation moving forward.
How Wall Street Recommends Playing Tesla
Despite Musk’s AI commitment, other Wall Street firms also remain in the same league as Wolfe Research on Tesla stock for now.
The consensus rating on TSLA shares currently sits at “Hold” only with the mean target of about $299 indicating potential downside of more than 2% from here.
