Simon Erickson, the Founder of 7Investing, recently constructed a financial model to independently value each part of Tesla's business and arrived at a value of $700 per share. His model emphasizes not only the potential of Tesla's automobile sales but also the expansive revenue opportunities presented by its self-driving software and proposed robotaxi network, which together could significantly elevate Tesla's overall market valuation beyond the current stock price.
The larger input in Simon's model is $355 billion in revenue from Tesla's robotaxi network by 2040. This projection is critical, as Simon believes that the successful implementation of this network could add immense value to Tesla's overall financial picture, justifying a share price close to $700. It's important to recognize that this figure is predicated on optimistic yet realistic forecasts of growth in both robotaxi services and autonomous driving technology.
Overall sales across all Tesla's cars reach 6.3 million units by Fiscal 2030 and 9.5 million by Fiscal 2040. These ambitious sales targets are built on the expectation that Tesla can capitalize on burgeoning demand for electric vehicles while also delivering innovative products, such as the Model 2. Achieving these milestones would underpin the financial projections and enhance investor confidence in Tesla's long-term growth trajectory.
However, with his model placing so much value on Tesla's robotaxi network, he would sell the stock if he saw the company falling behind or being unable to meet a timeline that saw the robotaxi network falling far behind his estimate that revenue can begin scaling by 2028. This highlights the notion that while Tesla presents an attractive investment opportunity today, there are significant risks tied to its long-term strategy.
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