Tesla’s Robotaxi Dreams Dim Amidst Market Challenges
Tesla (NASDAQ: TSLA) investors are left disheartened after the recent We Robot event, which failed to ignite excitement around the company’s robotaxi project, affordable model, and Full Self-Driving (FSD) technology. Instead of unveiling tangible advancements, the event felt more like a presentation of aspirations, leading to more questions than answers. Analysts highlighted several critical issues: no new capabilities were presented, the Optimus robot required human assistance, and the company’s credibility suffered.
Market reactions have been lukewarm, with a handful of revisions noted by Marketbeat maintaining ratings and price targets that lack strong support. As it stands, the consensus remains a Hold, leaning towards a negative outlook, with a price target set at $210. However, this target fails to capture the recent trend of downward revisions, showing a potential 20% decline if the stock continues on its current path.
Dan Ives from Wedbush remains the most optimistic analyst, focusing on long-term prospects and expected advancements by 2025. He has set a price target of $300, one of the highest among major firms. Despite this optimism, the reality is that Tesla’s stock is currently under pressure and could face another potential 20% decrease this year.
U.S. Auto Market Faces Challenges, Impacting Tesla
While electric vehicle (EV) sales soar in China, Tesla is experiencing a decline in market share, especially in its primary market, the U.S. S&P Global has issued a forecast indicating limited growth for the industry, anticipating just 1% to 2% growth amid economic challenges, including rising unemployment. Furthermore, average vehicle prices are expected to drop between 6% and 8%, partially due to the introduction of lower-cost EV models. Tesla’s own budget-friendly model seems to be on the distant horizon, with Elon Musk suggesting it may arrive in early 2025, although skepticism remains regarding this timeline.
Interestingly, Uber (NYSE: UBER) might benefit from Tesla’s setback. Jefferies analysts characterized the We Robot event as a silver lining for Uber, alleviating concerns surrounding the competition from Tesla’s autonomous driving efforts. They pointed out that Tesla’s singular approach to developing robotaxis may hinder its growth due to challenges in scaling, asset management, regulation, pricing, and fleet operations. In contrast, Uber is positioned to capitalize on the development of autonomous technology, poised to support various OEMs as they come to market.
Heightened Skepticism Surrounds Tesla’s Future Earnings
Analysts are revising their forecasts for Tesla’s performance in Q3, Q4, and the upcoming year but still retain an overly rosy outlook given the broader economic challenges and lack of substantial updates on key initiatives. Even with lowered expectations for Q3, consensus anticipates a year-on-year growth rate of 10%, with projections for a 16% growth rate in 2025 driven by ramped-up products and deliveries, despite expected reductions in pricing. Investors should prepare for these optimistic projections to be adjusted downward in the approaching quarters.
The recent trading activity for TSLA stock has not been encouraging. Following the We Robot event, the stock fell 10% and is currently testing support within its trading range. Although some support is present, it lacks strength, indicating a high chance of stagnation or continued decline. A critical support point is the 150-day EMA, located near $215; if breached, the stock could swiftly drop to the $180 mark.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
