In This Story
Tesla stock is shedding some of the massive gains it gained over the past few weeks after a report that the company will delay its self-driving car event.
Tesla CEO Elon Musk in April rallied investors when he promised the electric vehicle maker will reveal a robotaxi on August 8. But Bloomberg News, citing people familiar with the decision, reports that Tesla will delay its unveiling to October in order to give teams working on the project more time to build prototypes.
Tesla stock fell more than 6% in trading after the report, potentially halting an 11-day streak that has added more than $257 billion to the company’s valuation. Over the past month, the stock has gained more than 45%, boosted by shareholders’ re-approval of Musk’s $56 billion pay package and better-than-expected sales.
“While the knee jerk reaction will clearly be negative on a delay of August 8th based on [Bloomberg’s report], we believe the timing of robotaxis, partnerships, and the ultimate autonomous and AI driven technology does not change at all for our bullish Tesla thesis,” Wedbush Securities analyst Dan Ives wrote Thursday. Wedbush has a $300 per share price target for Tesla.
Analysts generally view the unveiling as less of a product launch and more of a demonstration of Austin, Texas-based Tesla’s aspirations for the technology. Musk has made a habit of promising new technology and vehicles in the past, only for the products to launch on the market years later.
The Cybertruck electric pickup was first revealed in November 2019 with production scheduled for 2021, although its first model wouldn’t be made until 2023. Tesla had aimed to launch a second-generation Roadster sports car on the market by 2021, but now expects to showcase a prototype by the end of 2024.
Robotaxis are expected to be a major moneymaker for Tesla in the future. Musk has described launching a network that’s a “combination of Airbnb and Uber,” since owners can opt their cars into the service at their leisure. Last month, he reiterated his pitch to Tesla owners that they can make money on the self-driving fleet while sleeping, as the company would call cars to pick up customers of its potential ride-hail service through an app.
Ark Investment Management has forecast a scenario that could bring Tesla to $2,600 per share, with 90% of the company’s value and earnings attributable to robotaxis by 2029. However, if such a network isn’t operable by then, Ark’s forecast drops to $350 per share.
After meeting with Tesla’s new head of investor relations, Travis Axelrod, in June, JPMorgan Chase analysts wrote that it doesn’t expect “material revenue generation likely for years to come.” Axelrod implied that a self-driving car would be built on a next-generation platform, which isn’t expected to launch before 2027.