Tesla’s Stock Volatility: Key Reasons to Consider Buying

Tesla (NASDAQ: TSLA) has experienced significant price fluctuations in 2025, with shares trading between $220 and $430. Despite concerns about overvaluation, many investors find Tesla’s growth trajectory compelling. There are two main reasons to consider purchasing shares before the upcoming earnings call in late July.

1. Tesla’s Significant Capital Advantage

Investing profitably in electric vehicle stocks has historically been challenging. Over the last decade, more than 30 EV companies have failed, primarily due to running out of capital before achieving profitability.

Bringing an electric vehicle to market requires substantial time and capital. For example, Rivian and Lucid Motors took nearly a decade to produce their first models. Although Tesla was founded in 2003 and launched its Roadster in 2008, it still faced delays like those seen with the Cybertruck.

Currently, Tesla stands as the largest pure-play EV manufacturer in North America, with a market cap of approximately $1 trillion. In contrast, Rivian and Lucid Group together value at about $30 billion. As less than 10% of U.S. vehicles are electric, there is potential for long-term growth among EV companies. Tesla’s substantial capital also allows it to invest aggressively in new models and technologies, outpacing rivals significantly. It could raise $30 billion in new cash with only a 2.5% shareholder dilution, enhancing confidence among debt holders.

This capital strength enables Tesla to pursue ambitious projects, which leads to the second compelling reason to invest.

Source: Getty Images

2. Robotaxis: A Significant Growth Opportunity

Investor Cathie Wood views Tesla’s future as heavily tied to its robotaxi initiative. Tesla has announced the upcoming Cybercab and plans to start its ride-hailing service in Austin, Texas, using 10 Model Ys equipped with its latest full self-driving software, referred to as “FSD Unsupervised.”

Wood believes that Tesla’s robotaxi service could dominate the U.S. ride-hailing market and significantly boost the company’s stock price, potentially increasing it by nearly 1,000% and contributing over 90% of revenues long-term.

While skepticism exists regarding the timelines for this service, the growth potential remains evident. Tesla, with its capital advantages, has the resources to develop the robotaxi concept effectively, even if it takes years to implement fully.

Investing in Tesla prior to its upcoming earnings report hinges on belief in the long-term prospects of both EV sales growth and the robotaxi initiative. Some analysts predict the robotaxi revenue could reach $1.7 trillion by 2040, making Tesla’s current $1 trillion market cap seem appealing. Potential investors should consider holding Tesla for the long term rather than seeking quick returns.

Remember: A Potentially Lucrative Opportunity

Investors often express regret over missed opportunities in the stock market. A “Double Down” alert has been given for companies deemed likely to appreciate substantially. Here are previous notable examples:

• Nvidia: If you had invested $1,000 when we doubled down in 2009, you’d have $350,426.
• Apple: A $1,000 investment from 2008 would now be worth $38,129.
• Netflix: A $1,000 investment from 2004 would now total $651,049.

Currently, alerts have been issued for three promising companies available to those who join our advisory service.

Ryan Vanzo has no positions in the stocks mentioned. The Motley Fool has positions in and recommends Tesla.

The views expressed are those of the author and don’t necessarily reflect those of Nasdaq, Inc.