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Thinking of Buying TSLA Stock Ahead of Robotaxi Day? Think Again
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Electric vehicle (EV) pioneer Tesla’s (TSLA - Free Report) most highly anticipated event in years is just around the corner. The company’s CEO, Elon Musk, is set to host Robotaxi Day tomorrow at Warner Brothers Discovery studio in California. The event is dubbed "We, Robot," and speculation about what the company will unveil has ignited excitement among investors. It remains to be seen if the event manages to live up to its hype.
Robotaxi Hype: What to Expect
Robotaxis have long been part of Elon Musk’s vision for the future, with promises of a revolutionary autonomous transportation service. Tomorrow’s event is expected to showcase a prototype of this much-anticipated robotaxi, potentially without traditional driving controls like steering wheels or pedals. The design is rumored to have a futuristic feel, similar to Tesla’s Cybertruck.
Industry analysts predict the event will feature a live demonstration of the robotaxi in action, summoned through Tesla’s ride-hailing app and navigating an obstacle course autonomously. This could be the first real look at Tesla’s autonomous vehicle (AV) capabilities in a public setting. However, it's essential to remember that this demonstration, while exciting, is only one step in a much longer process toward commercial viability.
Apart from the robotaxi, there are rumors of additional product reveals. Tesla could provide updates on Optimus, its humanoid robot project, and even tease other vehicles, such as a $25,000 electric car (commonly referred to as the Model 2) or a fully autonomous passenger van, dubbed the Cybervan.
Speculation has also swirled around potential partnerships, particularly with ridesharing company Uber (UBER - Free Report) and fast food giant McDonald’s (MCD - Free Report) . While a partnership with Uber could enhance Tesla’s commercialization efforts, it’s unclear whether Musk is ready to collaborate, given his preference for going solo. Speculation of a Tesla-McDonald’s collaboration arose after McDonald’s posted “chat’s about to pop off 10.10” on X, which Musk humorously fueled by replying with a laugh-crying emoji.
TSLA Lagging Behind Cruise and Waymo in the AV Race
Tesla lags behind competitors in the autonomous driving sector. Companies like Alphabet’s (GOOGL - Free Report) Waymo and General Motors’ (GM - Free Report) Cruise have been running regulated pilot programs for robotaxis for several years. Waymo is the only U.S. company currently operating uncrewed robotaxis that collect fares, while Cruise resumed its supervised autonomous driving program in Phoenix earlier this year.
Unlike its competitors, Tesla has chosen to rely on cameras and artificial intelligence, abstaining from more expensive radar and lidar systems, which are standard for most other AV companies. Though Tesla has made significant strides with its Full Self-Driving (FSD) system, the technology is not yet fully autonomous. Drivers must remain vigilant and ready to take control when necessary, indicating that full self-driving capabilities are still a work in progress.
Nonetheless, Musk confidently asserts that Tesla’s AVs will be the top performers in the market, regardless of being a late entry. Only time will tell if these are just tall claims or if they will actually prove to be true.
TSLA Investors Await Clarity
From an investment standpoint, the most critical piece of information to watch for at tomorrow’s event is a concrete timeline for production and commercialization of robotaxis. The robotaxi project has already faced multiple delays, and investors will be eager to hear Musk lay out a realistic timeline for when these vehicles will hit the road — and start generating revenues.
Another big question for tomorrow’s event will be whether Tesla can provide a clear path to overcoming regulatory hurdles. Tesla has made strides in advancing its AV technology, but the company must still address significant regulatory challenges. The U.S. AV market remains highly regulated, with strict safety standards that Tesla will need to meet before its robotaxis can hit the streets.
Should You Consider Buying TSLA Stock Now?
With so much anticipation surrounding the event, many investors are wondering if now is the right time to buy Tesla stock. Well, there are reasons to be cautious.
Tesla’s gross margins have taken a hit over the past year amid aggressive pricing and incentives. While the company’s third-quarter deliveries increased year over year, they still fell short of Wall Street expectations. Earlier this year, Tesla cautioned that it may experience slower delivery growth this year. With deliveries down more than 2% in the first three quarters, the company will need a strong close to the year to achieve any growth in 2024.
Tesla has also faced production issues with its flagship Cybertruck, issuing five recalls within the first year of its release. Additionally, any new vehicle announcement at the robotaxi event could mean increased investment in production lines, factory downtime and other costly delays — none of which are likely to be well-received by investors looking for immediate returns.
TSLA stock has moved up 8.1% over the past month, outperforming the industry, sector and the S&P 500.
1 Month Price Performance
Image Source: Zacks Investment Research
The stock is quite overvalued. TSLA shares currently trade at 7.07X forward sales, way higher than the industry. It carries a value score of D.
Image Source: Zacks Investment Research
Discouragingly, Tesla’s earnings estimates have also been trending downward.
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Last Word
Remember, Musk has a history of making bold predictions about Tesla’s future, often setting ambitious timelines that the company struggles to meet. Historically, Musk's big reveals often come with a fair amount of fanfare but can sometimes fall short of delivering immediate business impact. Past Tesla events have often led to a pattern of "buy the rumor, sell the news," with the stock price rising ahead of the announcement and falling once the reality sets in.
While the hype surrounding the Robotaxi event is palpable and it could provide exciting glimpses into Tesla’s future, it’s important for investors to keep their expectations in check. Given TSLA’s recent stock run-up and the high stakes of tomorrow’s event, the risks may outweigh the potential rewards for short-term investors. Rather than jumping in now, it may be prudent to take a wait-and-see approach, letting the dust settle after the event.
Image: Shutterstock
Thinking of Buying TSLA Stock Ahead of Robotaxi Day? Think Again
Electric vehicle (EV) pioneer Tesla’s (TSLA - Free Report) most highly anticipated event in years is just around the corner. The company’s CEO, Elon Musk, is set to host Robotaxi Day tomorrow at Warner Brothers Discovery studio in California. The event is dubbed "We, Robot," and speculation about what the company will unveil has ignited excitement among investors. It remains to be seen if the event manages to live up to its hype.
Robotaxi Hype: What to Expect
Robotaxis have long been part of Elon Musk’s vision for the future, with promises of a revolutionary autonomous transportation service. Tomorrow’s event is expected to showcase a prototype of this much-anticipated robotaxi, potentially without traditional driving controls like steering wheels or pedals. The design is rumored to have a futuristic feel, similar to Tesla’s Cybertruck.
Industry analysts predict the event will feature a live demonstration of the robotaxi in action, summoned through Tesla’s ride-hailing app and navigating an obstacle course autonomously. This could be the first real look at Tesla’s autonomous vehicle (AV) capabilities in a public setting. However, it's essential to remember that this demonstration, while exciting, is only one step in a much longer process toward commercial viability.
Apart from the robotaxi, there are rumors of additional product reveals. Tesla could provide updates on Optimus, its humanoid robot project, and even tease other vehicles, such as a $25,000 electric car (commonly referred to as the Model 2) or a fully autonomous passenger van, dubbed the Cybervan.
Speculation has also swirled around potential partnerships, particularly with ridesharing company Uber (UBER - Free Report) and fast food giant McDonald’s (MCD - Free Report) . While a partnership with Uber could enhance Tesla’s commercialization efforts, it’s unclear whether Musk is ready to collaborate, given his preference for going solo. Speculation of a Tesla-McDonald’s collaboration arose after McDonald’s posted “chat’s about to pop off 10.10” on X, which Musk humorously fueled by replying with a laugh-crying emoji.
TSLA Lagging Behind Cruise and Waymo in the AV Race
Tesla lags behind competitors in the autonomous driving sector. Companies like Alphabet’s (GOOGL - Free Report) Waymo and General Motors’ (GM - Free Report) Cruise have been running regulated pilot programs for robotaxis for several years. Waymo is the only U.S. company currently operating uncrewed robotaxis that collect fares, while Cruise resumed its supervised autonomous driving program in Phoenix earlier this year.
Unlike its competitors, Tesla has chosen to rely on cameras and artificial intelligence, abstaining from more expensive radar and lidar systems, which are standard for most other AV companies. Though Tesla has made significant strides with its Full Self-Driving (FSD) system, the technology is not yet fully autonomous. Drivers must remain vigilant and ready to take control when necessary, indicating that full self-driving capabilities are still a work in progress.
Nonetheless, Musk confidently asserts that Tesla’s AVs will be the top performers in the market, regardless of being a late entry. Only time will tell if these are just tall claims or if they will actually prove to be true.
TSLA Investors Await Clarity
From an investment standpoint, the most critical piece of information to watch for at tomorrow’s event is a concrete timeline for production and commercialization of robotaxis. The robotaxi project has already faced multiple delays, and investors will be eager to hear Musk lay out a realistic timeline for when these vehicles will hit the road — and start generating revenues.
Another big question for tomorrow’s event will be whether Tesla can provide a clear path to overcoming regulatory hurdles. Tesla has made strides in advancing its AV technology, but the company must still address significant regulatory challenges. The U.S. AV market remains highly regulated, with strict safety standards that Tesla will need to meet before its robotaxis can hit the streets.
Should You Consider Buying TSLA Stock Now?
With so much anticipation surrounding the event, many investors are wondering if now is the right time to buy Tesla stock. Well, there are reasons to be cautious.
Tesla’s gross margins have taken a hit over the past year amid aggressive pricing and incentives. While the company’s third-quarter deliveries increased year over year, they still fell short of Wall Street expectations. Earlier this year, Tesla cautioned that it may experience slower delivery growth this year. With deliveries down more than 2% in the first three quarters, the company will need a strong close to the year to achieve any growth in 2024.
Tesla has also faced production issues with its flagship Cybertruck, issuing five recalls within the first year of its release. Additionally, any new vehicle announcement at the robotaxi event could mean increased investment in production lines, factory downtime and other costly delays — none of which are likely to be well-received by investors looking for immediate returns.
TSLA stock has moved up 8.1% over the past month, outperforming the industry, sector and the S&P 500.
1 Month Price Performance
Image Source: Zacks Investment Research
The stock is quite overvalued. TSLA shares currently trade at 7.07X forward sales, way higher than the industry. It carries a value score of D.
Image Source: Zacks Investment Research
Discouragingly, Tesla’s earnings estimates have also been trending downward.
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Last Word
Remember, Musk has a history of making bold predictions about Tesla’s future, often setting ambitious timelines that the company struggles to meet. Historically, Musk's big reveals often come with a fair amount of fanfare but can sometimes fall short of delivering immediate business impact. Past Tesla events have often led to a pattern of "buy the rumor, sell the news," with the stock price rising ahead of the announcement and falling once the reality sets in.
While the hype surrounding the Robotaxi event is palpable and it could provide exciting glimpses into Tesla’s future, it’s important for investors to keep their expectations in check. Given TSLA’s recent stock run-up and the high stakes of tomorrow’s event, the risks may outweigh the potential rewards for short-term investors. Rather than jumping in now, it may be prudent to take a wait-and-see approach, letting the dust settle after the event.
TSLA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.