The firm highlighted a re-acceleration in Tesla's automotive growth, driven by the launch of lower-cost models and stabilizing gross margins as the company continues to reduce costs in line with pricing adjustments. One of the key drivers for Tesla's potential is the progress in Full Self-Driving (FSD) technology, according to the firm.
New Street states that 'FSD progress is accelerating,' strengthening their belief that Tesla could launch partially unsupervised FSD and robotaxi test fleets this year. While acknowledging the long and challenging road toward scaled deployments, they expect the stock price to increasingly reflect the significant opportunities in this area. Looking further ahead, New Street sees “significant long-term upside,” estimating a potential market cap of up to $4.7 trillion by 2030 if Tesla successfully transitions to a dominant robotaxi fleet. Although they caution that this scenario is still a long shot, they believe the trajectory toward it justifies the current high valuation multiples. Despite near-term uncertainties such as weak demand and the timing of new model launches, New Street views these challenges as potential opportunities for long-term investors. They state, 'The near term is still uncertain (weak demand, timing of new models, etc.) This could pressure the stock and only create better opportunities for long-term investors.' Overall, New Street concludes that the risk-reward profile for Tesla is positive, with many catalysts set to drive future growth