Tesla (TSLA) stock fell more than 7% midday Friday as investors expressed disappointment with the company’s robotaxi debut.
After Thursday night’s “We, Robot” event aimed at cementing CEO Elon Musk’s position as an AI leader, investors and analysts expressed their belief in Tesla’s lofty take on the future of self-driving taxis. I felt more skepticism than excitement about the vision.
In a note to investors Friday morning, Jefferies (JEF) analysts called Tesla’s $30,000 robotaxi, called CyberCab, a “toothless taxi” and said Tesla has “ambitious goals.” “, but there is “little evidence of its feasibility,” he added.
“We believe TSLA is potentially underestimating the obstacles to robotaxi fleet expansion,” they wrote.
Tesla’s new CyberCab has no steering wheel or pedals and is designed to be fully autonomous, Yahoo Finance’s Pras Subramanian reports. The company announced that it will begin unsupervised fully self-driving (FSD) testing using Model 3 and Model Y test vehicles in Texas and California next year. Tesla aims to begin production of the CyberCab “by 2027,” Musk said.
Tesla’s stock decline on Friday extended its decline to two weeks. TSLA stock fell last week after the company reported third-quarter deliveries that fell short of Wall Street expectations, announced a recall and discontinued sales of lower-priced models. The company’s stock, which has experienced far more volatility than its Magnificent Seven peers over the past year, is down 17% from last year. Still, TSLA’s price of $220 a share on Friday is much higher than its lows of less than $140 this spring. Amid layoffs and price cuts at Tesla, the company’s stock hit a 15-month low in April.
Investors and analysts had hoped the company’s long-awaited robotaxi event would live up to the hype, but Musk hasn’t provided clarity on how the company will achieve its ambitious goals. I was disappointed that it wasn’t there.
Josh Beck, an analyst at Raymond James (RJF), said Tesla’s plans to commercialize the CyberCab are “vague” and “unconvincing.” Analysts at Morgan Stanley (MS) said the event was “unfortunately lacking in details” about updates on Tesla’s FSD technology and market strategy.
RBC Capital analyst Tom Narayan agreed, writing in a note Friday that investors believe Musk’s vision is “not grounded in actual numbers and timelines.”
“These usually take place at Tesla events,” he added. “This seemed more focused on branding and marketing Tesla’s vision rather than giving them concrete numbers to model.”
Additionally, Tesla did not reveal details about the low-cost car that some investors had expected. Analysts noted that the vehicle is expected to go on sale in the first half of 2025.
A still image taken from a video of Tesla CEO and X owner Elon Musk riding a Tesla robotaxi at a launch event in Los Angeles, California, USA on October 10, 2024. Handout via Tesla/Reuters (Reuters/Reuters)
Indeed, some Wall Street experts consider “We, Robot” a success. Analysts at Bank of America said the robotaxi event “lived up to the hype.”
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“We believe last night gave consumers a glimpse into the future of Tesla and next-generation transportation,” Wedbush analyst and Tesla bull Dan Ives said in a note Friday. He also mentioned Tesla’s humanoid robot, Optimus, which “far exceeded” Wedbush’s expectations.
Analysts at Bank of America (BAC) said Musk has the potential to make Optimus the “biggest product of any kind (in history)” in terms of commercial success. The robot’s underlying AI technology is the same as that used in Tesla vehicles.
“We believe this speaks to the fact that TSLA is much more than a traditional car company at this point,” Bank of America analysts said.
Wedbush’s Ives noted the lack of details about Tesla’s CyberCab rollout, but said, “After seeing the CyberCab for myself and seeing the vast improvement over Optimus, I would argue against it. “(We) strongly disagree with the idea that last night was disappointing.” We socialized all night. ”
Good news for Uber and Lyft
The overall muted reaction to Tesla’s robotaxi launch bodes well for ride-hailing companies Uber (UBER) and Lyft (LYFT).
“While it is clear that building and launching services is Tesla’s long-term direction, ambiguity (or lack thereof) about services could prompt UBER and LYFT to begin market share defense as early as next year. Our biggest fear comes in,” RBC’s Narayan said. Shares of Uber and Lyft both rose about 10% on Friday.
Wall Street has mixed opinions about Tesla stock. Roughly 26 Wall Street analysts tracked by Bloomberg recommend buying, while 20 have hold ratings and 15 advise investors to sell. Analysts overall expect the stock to fall to $216.59 over the next 12 months, according to Bloomberg consensus data.
Laura Bratton is a reporter for Yahoo Finance. X Follow her at @LauraBratton5.
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