Al Root
Investors in Tesla have a new reason to worry about the stock: potential competition for the electric-vehicle company's humanoid robot, called Optimus, from a partner of OpenAI.
That adds to the other factors that had made Tesla stock the worst performer in the S&P 500 year to date coming into Friday trading: Slowing demand growth for EVs, lower prices, and management turmoil have all weighed on investor sentiment.
Wednesday, a robotics start-up, and OpenAI partner called Figure posted a demonstration of a humanoid robot it calls Figure One. In a video posted on Tesla CEO Elon Musk's social media company X, the robot carried on a conversation while completing tasks such as sorting dishes and cleaning up some trash.
Figure wrote that the robot is "powered by OpenAI" and learns via a "neural network." The two-and-a-half-minute video is eye-opening.
Musk, meanwhile, has touted the merits of Optimus, Tesla's robot. "It's by far the most sophisticated humanoid robot that's being developed anywhere in the world," he said on his company's January earnings conference call.
Optimus might be the most sophisticated, but Figure One could likely challenge that claim.
Musk has also trained Tesla investors to expect a lot from the Tesla bot. "The importance of Optimus will become apparent in the coming years, " said Musk in April 2022. "Those who are insightful or who listen carefully will understand that Optimus ultimately will be worth more than the car business and worth more than FSD. That's my firm belief."
FSD is short for Full Self Driving, the name of Tesla's highest-level driver assistance software and technology. FSD is the product Musk's believes will eventually turn all Teslas into truly self-driving cars and robotaxis.
The market for humanoid robots is hard, if not impossible, to project. For starters, there are no mass-market humanoid robot helpers for sale. How much they will cost, what they can do, and how fast they will improve is anyone's guess.
All that, plus competition from Figure and OpenAI, are reasons "valuing Optimus [for Tesla] is hard," Future Fund Active ETF co-founder, and Tesla shareholder, Gary Black tells Barron's.
To be sure, the opportunity to make money from Optimus is a ways off. Still, despite recent declines, Tesla is the most valuable car maker on Earth partly because investors see it as more than a car company. Tesla has solar, battery storage, artificial-intelligence computing, and robotics businesses under its roof.
Compounding the AI and Optimus problem for Tesla investors is Tesla's ownership structure. Musk said in January he wants 25% voting control in Tesla stock to keep his AI projects under the Tesla roof. Musk owns about 13% of Tesla stock outright and has options amounting to an additional 7%. Those options, however, were voided by a Delaware judge who agreed with a plaintiff that Musk's 2018 pay package -- the source of the options -- violated corporate best practices. That case is being appealed.
Musk's pay, Optimus, Figure One, as well as the headwinds in the global EV business -- prices are falling and demand growth is slowing -- all add up to uncertainty for investors.
They hate uncertainty. It's a big reason why, coming into Friday trading, Tesla stock was down more than 30% so far this year.
Shares were up 0.4% in premarket trading Friday after falling 4.1% on Thursday. S&P 500 futures were up 0.1%, while Nasdaq Composite futures were flat.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 15, 2024 08:52 ET (12:52 GMT)
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