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The news is, without doubt, big. A look at the broader picture, however, leaves me bearish on Tesla. On that point, I’m far from alone.
Late on Friday, Tesla announced that it was opening up its Full Self-Driving beta program to more drivers. (See Tesla stock charts on TipRanks)
Drivers had to request access to the beta, and then the driver’s “safety score” would be evaluated in order for the driver to gain access. The safety score uses five different points of measurement to consider how likely the individual was to end up in a collision down the line.
Those points include: how hard the vehicle has braked, how hard the vehicle has turned, the vehicle’s average follow distance to other vehicles, the number of forward collision warnings the vehicle has issued to the driver, and Forced Autopilot Disengagement (those times when the car’s Autopilot feature shuts down because the driver took his or her hands off the wheel and became “inattentive”).
While Tesla notes that the average driver will have a “safety score” of around 80 out of 100, Tesla didn’t note just what kind of score was needed to qualify for the Full Self-Driving beta.
Wall Street’s Take
Wall Street consensus analysis calls Tesla a Hold. That’s based on the 26 analysts that have posted 12-month price targets for the company over the last three months. So far, 12 analysts have a Buy rating on Tesla, along with seven Holds, and seven Sells.
The average Tesla price target falls in an incredibly broad range. The current average price target for Tesla is $690.18, bookended by a high target of $1,200 and a low of $150. That represents a downside potential of 11.2%.
Disturbing Troubles on a Pricey Stock
Tesla is a puzzling proposition for investors. On the one hand, it’s still the leader in electric cars by a pretty wide margin. Where else are you going to find anything resembling a self-driving car? That doesn’t even count the advances Tesla has made in battery technology.
Yet at the same time, the failures that Tesla made to get to this point are still blatant.
One Tesla owner took to Twitter (NYSE:TWTR) to detail the issue he had. While driving to dinner, the Tesla he was driving issued a disturbing warning via a message that read “Vehicle May Not Restart: Service Required.” That’s problem enough for anyone, except this message came with two other problems: the vehicle locked up while displaying that message, and the vehicle locked up in the middle of a highway lane.
The driver was not even allowed to pull off to the shoulder before the Tesla turned itself into a particularly expensive paperweight. Interestingly, the driver was warned that he needed to pull over immediately. However, the vehicle didn’t allow the driver time to actually follow the car’s instructions before it came to a halt, and locked up all its controls in the middle of a six-lane highway.
That’s a problem, but it’s far from the only one. Tesla fires were a major story through much of 2020. EV fires aren’t just a Tesla problem, however. General Motors (NYSE:GM) came out to advise Chevy Bolt owners that they shouldn’t park a Bolt within 50 feet of another vehicle.
Concluding Views
Tesla has made a lot of headway by being on the cutting edge of automotive technology. Amazing advances balance against unfulfilled promises. Its stock performance this year has been a rollercoaster ride by any measure.
While it’s certainly looking to make a push back to its previous highs, and maybe even make a run on the high price targets, this isn’t a ride for the risk-averse.
There are still quite a few problems with Tesla in general. That makes its premium pricing right now look like a price tag too large to comfortably pay.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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