Tesla (NASDAQ:TSLA) stock exits 2023 in great shape. With a market cap of over $800 billion, it’s the only industrial in the “Magnificent 7” we are told every investor should own. Revenue for this year should approach $100 billion, with net income at over 10% of that figure, but 2024 may be more difficult.
Every car company is now mass producing electric vehicles. Tesla must maintain its margins in the face of that global competition to maintain its market cap. Toyota Motor (NYSE:TM) is worth less than one-third as much.
The Bull Case for TSLA Stock
The bull case, from Dan Ives of Wedbush, is that Tesla will be worth over $1 trillion next year. Margins have bottomed out, self-driving is coming, and Tesla’s SuperCharger network will let it take profits from every other EV company. Ives compares Tesla to Apple (NASDAQ:AAPL) in 2009, as it was just learning how to monetize its ecosystem.
Then there’s Optimus, a humanoid robot CEO Elon Musk claims can be as big a product as the car. It can dance, and in a year, it will thread a needle, he insists.
Tesla has launched a drive to build a second factory in China. Its Mexico factory is on track and will make 1 million cars per year. Its Texas factory will also go into full production in 2024 and it’s looking to build a new battery plant in Canada.
The Bear Case
The bear case for Tesla is tied to growing EV supplies from the rest of the world and slumping demand.
The most interesting challenge comes from Li Auto (NASDAQ:LI), which is outgrowing Tesla with a battery-first hybrid. By adding a small gas-powered motor, Li can deliver a family SUV that runs 800 miles between fill-ups, with luxury electronics that include self-driving.
Li’s success should be especially frightening because hybrids are Toyota’s business. Toyota is also electrifying its entire product line. It says the solid state batteries it delivers in 2027 will go over 600 miles between 10-minute charges.
The Musk Case
Then there’s Musk himself. When you buy TSLA stock, you’re buying Elon Musk. Musk hates unions. He gives raises only grudgingly. It’s like he thinks Optimus will replace his human work force, so why care?
Musk may prevail. If you believe in him, buy the stock. I won’t. There are too many opportunities with more certainty for my money. Like Toyota, with a price to earnings multiple of 9 and a dividend worth 2.8% in a falling interest rate environment.
As of this writing, Dana Blankenhorn had a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.