Tesla: A Weak Hold Ahead Of The Robotaxi Event
Tesla (TSLA) is currently preparing for its October 10 Robotaxi event, and investors’ eyes will be on what’s announced there. TSLA stock trades at a truly nosebleed valuation when using trailing earnings and growth rates, but if the company can really launch a fully autonomous global Robotaxi fleet, then it may start growing again.
Tesla is trying to build truly autonomous EVs that can run anywhere in the world, including in cities that it has never been specifically trained on. Competing services like Google’s (GOOG) Waymo have taken a more conservative approach, launching robotaxis only in cities where they were rigorously pre-trained. This distinction makes the FSD project more ambitious than competing ones, but it has also resulted in Tesla Robotaxi failing to launch, when Waymo’s comparable service is a reality in three cities.
So far, operational news about Tesla FSD has mostly come in shy of investors’ expectations. However, there have been occasional glimmers of hope. After its first quarter earnings came out, Tesla experienced its strongest open since the COVID-19 period, rising 12% in a single trading day. Hopes for the new FSD Robotaxi ran high.
The enthusiasm didn’t last long. On July 11, Tesla announced that the Robotaxi event, previously scheduled for August 8, would be postponed until October. TSLA stock crashed 7% on that day.
Now, with enthusiasm for the Robotaxi event running high again, TSLA stock is again rising. It’s not clear how much of this is event hype and how much is the post-FOMC rally in everything tech, but it’s at least plausible that the event is playing a role in how Tesla is trading. Although tech stocks in general rallied on Thursday, Tesla easily outperformed the pack, rising 7.36%. That would seem to indicate that the upcoming Robotaxi is a potential catalyst that investors see driving future returns.
It’s for this exact reason that investors ought to tread carefully with Tesla right now. The stock appears to be generating enthusiasm because of an expected future catalyst, but nobody actually knows whether the outcome on October 10 will be a positive one. If it is revealed at the event that the Robotaxi is not actually ready to launch on a specific date, that may well turn the mood pessimistic again.
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