Should You Invest $500 in Tesla Right Now?​

Few, if any, megacap stocks elicit the same intense emotions among investors as Tesla (NASDAQ: TSLA). Many of those strong opinions are tied to Tesla's status as anything but a value stock. At the end of the third quarter, it sported a price-to-earnings (P/E) ratio of 297 and a price-to-book (P/B) ratio of 18.5.

Under any circumstances, those are elevated figures, especially given that sales are declining. Tesla's recently unveiled 2025 sales targets indicate Cybertruck sales tumbled 48% year over year, while the S, X, and Y models also experienced volume dips. Only the Model 3 posted an annual sales increase, and it was just 1.3%.

Declining sales and a lofty valuation may appear to be a toxic brew, but Tesla's other bets could reward investors. Here's how.

Autonomous transportation is just one part of the bull case for Tesla stock. Image source: Getty Images.

"Hailing" Tesla's potential

One of the primary reasons Tesla bulls stick with the stock even as the company's electric vehicle sales are heading in the wrong direction is enthusiasm for robotaxis. What sounded like a far-off, far-flung concept just a few years ago isn't just inching closer to reality; it is reality in some cities. For example, Alphabet's Waymo is taking market share from Uber Technologies in San Francisco.

Cathie Wood's Ark Investment Management, which has long been bullish on Tesla, says declining costs and prices will stoke demand for robotaxis, adding, "Tesla has the production capacity to build fleets and accommodate all urban vehicle miles in top ride-hail cities."

For Tesla to meet the robotaxi hype, several things need to go right, and that includes expanding into new cities and getting the human "failsafe" drivers out of the vehicles on a timeline that pleases market participants. That is to say, investors need to stay abreast of robotaxi headlines and exercise some patience because it could be 2027 or 2028 (or beyond) before robot-powered ride-hailing is widely available in the U.S.

Tesla bulls and believers in CEO Elon Musk can take some heart in knowing that Musk is eating his own cooking and believes the company's autonomous capabilities imply the company is worth more than the rest of the automobile industry.

Speaking of Tesla and robots...

Autonomous ride-hailing isn't Tesla's lone exposure to a robotics-fueled disruptive technology. It may not even be the most additive to the stock's long-term growth story. Humanoid robotics, or robots that perform human tasks, could prove to be the catalyst that ignites another Tesla rally.

At the World Economic Forum last week, Musk said Tesla's Optimus robots, which could be available later this year, could, over time, add a staggering $20 trillion to the company's market capitalization. If Musk's forecast is anywhere in the ballpark of accurate, it implies that this stock -- which has already been a multibagger multiple times over -- will accomplish that feat again.

As with robotaxis, there are moving parts with Optimus. Namely, Tesla needs to keep the delivery timeline tight and eventually push costs down so that prices follow suit, driving widespread adoption. For investors, even those with modest positions in Tesla, the good news is that Wall Street is increasingly factoring Optimus into the valuation equation.

Todd Shriber has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.