Musk Eyes Tesla's Cash to Finance xAI Ambitions

Elon Musk's recent actions are bewildering. Allocating funds to Grok at Tesla's expense suggests he's diverting money away from the carmaker. The $5 billion allocated is significant, almost equivalent to Tesla's annual net income. In Q2, Tesla's net income plummeted 45% to $1.48 billion, or 42 cents a share, down from $2.7 billion, or 78 cents a share, the previous year. Although Tesla is generating more revenue from energy storage solutions, it's a mere drop in the ocean. The recent stock surge from $140 to $250 appears to be based on overblown expectations, with no robotaxi in sight.

Meanwhile, Alphabet has committed to investing the same $5 billion in Waymo without conducting any polls on X or elsewhere. Google CEO Sundar Pichai highlighted on the earnings call that Waymo is currently delivering over 50,000 paid rides per week. The company offers a fully driverless ride-hailing service in San Francisco, Phoenix, Los Angeles and Austin. So Tesla, if it will be on the same page, will have strong competitors. Looks like it's in a transitional period to anything but boring car business. Should shareholders keep keep the faith? If so, when you buy Tesla, you dive in the unpredictable world of the future, and you have to believe.

Image Credits: Waymo

Of course, you can tell me that there are people like Cathie Wood with extremal valuations of Tesla like $3k. But you have to know that she invests not her money, its people who believe in her strategy. She's really good - well delivered speech, mind blowing prognosis, extreme valuations. She's an ideal saleswoman. Of course, all these humanoids, robotaxis and other rosy unicorns can come true but now much time to you have to wait?