TuSimple (TSP) is an autonomous trucking company, which is headquartered in California, United States. The company was founded in 2015 with the primary focus on improving the efficiency and safety of the trucking industry. It develops self-driving technologies specifically for the heavy-duty truck industry and has several partnerships with carriers and shippers across the globe.
With the reduced carbon footprint, transparent analytics, and low-price strategies, the company is aiming to expand its customer base and present new possibilities for the industry. The company has also developed the TuSimple Autonomous Freight Network [AFN] to enhance the usability of its autonomous trucks.
I am neutral on TuSimple as it is facing headwinds from inflation and rising interest rates, and the company remains far from profitable. However, Wall Street analysts are almost unanimously bullish on it, and its average price target implies massive upside potential over the next year.
Strengths
TuSimple’s early arrival into the long-haul truck segment and strong partnerships put this company above several other competitors working in a similar niche. Its low-priced solutions and products also give it a robust competitive advantage, and the company is currently planning to expand its global footprint by introducing hundreds of new jobs worldwide.
The increasing transition toward AI-powered vehicles is expected to result in rapid growth in revenues and market shares. The overall industry’s shift toward automated vehicles also presents several external opportunities for the company to grow and expand in the future.
Recent Results
Q3 2021 ended in September and resulted in revenues reaching $1,785,000, compared to $584,000 in the previous year’s third quarter. In the nine months that ended in September 2021, the revenues totaled $4,211,000, compared to $1,106,000 in the previous year. The net loss in the quarter reached $115,490, compared to $89,452 in Q3 of 2020.
Additionally, the net loss per share declined to $0.54 from $1.73 in Q3 2020.
Valuation Metrics
TSP stock is very difficult to value because it is not profitable, trades at a steep multiple of revenues, and is growing rapidly. For example, its forward enterprise-value-to-sales ratio is a whopping 133.7 times. Meanwhile, analysts expect revenue to grow by 311.2% in 2022 and EBITDA losses to widen by 27.1% as well in 2022.
Wall Street’s Take
According to Wall Street analysts, TSP earns a Strong Buy consensus rating based on seven Buys and one Hold rating assigned in the past three months. Additionally, the average TuSimple price target of $51.22 puts the upside potential at 168.3%.
Summary and Conclusions
TuSimple is well positioned as an early leader in autonomous truck driving technology that, if successful, should enable it to enjoy rapid growth for many years to come. Its target industry is essential to the economy and should see massive growth thanks to the ongoing shift towards e-commerce.
Furthermore, analysts are overwhelmingly bullish on the stock, and the average price target implies massive upside potential over the next year. That said, the stock continues to trade at a very steep multiple even after the recent crash in the stock price, and the company remains far from profitability.
With interest rates poised to rise meaningfully from historical lows in the face of historically high inflation, investors may want to wait for a further pullback in stock price before adding shares.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
