Tesla's (TSLA) stock may be on the skids right now, but one perma-bull considers the slide to be a perfect buying opportunity.
“I’m very convinced this [stock] goes to $5,000 or $10,000 [long-term] once people understand what Tesla is all about,” retail investor and Tesla shareholder Alexandra Merz told Yahoo Finance Executive Editor Brian Sozzi for his Opening Bid podcast (See video above or listen in here).
Merz is a former financial adviser and current CEO of L&F Investor Services and is no stranger to the electric vehicle space.
Since 2014, she has enthusiastically been behind the wheels of various EVs. Of all the EVs she’s come into contact with, her Teslas are all that and then some, she says. After test-driving a Model 3, she realized Tesla was more than just a car company — it was also a tech play.
She began purchasing Tesla stock after liquidating other assets and has since become a fierce advocate of the brand on Elon Musk's X, formerly known as Twitter — where she can be found driving discussions on the brand among her more than 100,000 followers under the handle TeslaBoomerMama.
To Merz, Tesla's stock remains undervalued for two main reasons.
First, the market is not properly pricing in the company's earning power from the widespread adoption of its Optimus humanoid robots over time.
These robots have their doubters, including former Meta head of AI Jerome Pesenti. "Sometimes we have to call it what it is, right? I mean, have you seen this [robot] thing do anything? It's bulls**t," Pesenti said on Opening Bid.
Second, Tesla's AI is a competitive advantage that can widen its moat against car rivals such as General Motors (GM).
In the end, Merz thinks fellow Tesla bull Cathie Wood's $2,600 long-term price target on Tesla's stock (currently the most aggressive in the finance world) will prove conservative.
Despite Tesla's alleged longer-term potential, investors like Merz are dealing with a different short-term reality.
Tesla's stock — often seen as riskier than the broader market — has been swept up in the recent tech meltdown.
Shares of the EV maker have tanked 20% in the past month, according to Yahoo Finance data. The S&P 500 (^GSPC) has shed about 6% during that same stretch, with the Nasdaq Composite (^IXIC) off by 11%.
The sell-off was triggered in part by the company's lackluster second quarter earnings report in late July, which included the promise of cheaper EVs in 2025.
"Although both technology and execution risk seem substantially less than was once feared, expansion into higher volume segments with lower price points seems fraught with greater risk relative to demand, execution, and competition. Meanwhile, valuation appears to be pricing in upside related to expansion into mass-market segments well beyond our volume forecasts for the Model 3," said JPMorgan analyst Ryan Brinkman in a client note.
Brinkman holds an Underweight rating (Sell equivalent) on Tesla's stock.
Further dragging on sentiment on Tesla is the mercurial Musk.
Musk continues to feud with OpenAI CEO Sam Altman, again filing a lawsuit alleging that he was misled about OpenAI's mission as an early backer.
On the political front, Musk has backed Republican presidential candidate Donald Trump, a noted critic of EVs.
Tesla also recently postponed its robotaxi event from mid-July to Oct. 10, stirring speculation the unveiling could be a letdown.
As an enthusiastic investor, Merz is following this barrage of information but taking it with a grain of salt. She says buying Tesla's stock on its latest sell-off makes sense.
“As any Tesla investor knows, we have our ups and downs because while we see the long-term vision, obviously, the day-to-day stock price can be fluctuating,” Merz said.
Ultimately, it’s not “only a car company, [it’s an energy company and this whole tech company that’s] going to bring us full self-driving,” she said. “It is also going to bring us this whole real-life AI.”
Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. Find more episodes on our video hub. Watch on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
In the below Opening Bid episode, Ford (F) CEO Jim Farley shares a story on a recent interaction he had with Elon Musk.
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