Tesla's Robotaxi Delay: Analysts Weigh In on Musk's Strategy Shift

Analysts reboot Tesla stock price target after robotaxi delay

On April 8 Tesla (TSLA) Chief Executive Elon Musk made the announcement on his X, the microblogging platform he owns. Related: Tesla pushes back big robotaxi unveiling "Tesla Robotaxi unveil on 8/8," he wrote. A few weeks later, on April 23, Musk told analysts during the electric vehicle maker's first-quarter-earnings call that "we will be showcasing our purpose-built robotaxi or Cybercab in August." Tesla had provided a sneak peek of its upcoming ride-hailing mobile app in the earnings report. It included five screens, featuring a Summon button and estimated wait times, followed by a 3D map displaying a virtual vehicle en route to the passenger. Musk has suggested that Tesla owners would be able to earn revenue from their personally owned autonomous cars by sending them out to pick up and drop off passengers. "There will be some number of cars and then there'll be a bunch of cars where they're owned by the end user," Musk said. Tesla stock takes a tumble "That end user can add or subtract their car to the fleet whenever they want, and they can decide if they want to only let the car be used by friends and family or only by five-star users or by [anyone. At] any time they could have the car come back to them and be exclusively theirs like an Airbnb," he added During the call, Musk repeated his belief that "in the future, gasoline cars that are not autonomous will be like riding a horse and using a flip phone." Related: Analyst reboots Tesla stock price target on energy demand "And that will become very obvious in hindsight," he said. Tesla's stock tumbled 8.4% following the report, marking the company's first share-price loss after 11 straight gains and the biggest one-day decline since a 12.1% fall on Jan. 25, which followed a disastrous analyst earnings call. The report did not give a specific date for the new unveiling. The reason for the delay, Bloomberg said, was that teams working on the project "needed more time to build additional prototypes." Of course, this wasn't the first time Musk had promised the world a robotaxi. In 2019, he said Tesla would have over a million fully autonomous robotaxis on the road by mid-2020. "Tesla has been playing this game for nearly a decade of promising 'next year, next year'. And I've seen no indication that Tesla ... is on track for a meaningful deployment of the kind of automated driving system that Tesla has consistently promised," Bryant Walker Smith, a University of South Carolina law professor who has expertise in autonomous-vehicle law, told Reuters. Analysts issued research notes on July 12 adjusting their ratings and price targets one day after the robotaxi announcement. UBS downgraded Tesla to sell from neutral with a price target of $197, up from $147. The stock's valuation premium has widened of late on artificial intelligence enthusiasm, the firm said, according to The Fly. (The stock closed Thursday, July 11, at $241.03, so UBS's new target indicates a 39% drop.) The firm said it had downgraded the stock to sell following the recent share rally due to the lack of visibility and the risk that Tesla's growth opportunities materialize on a longer time horizon or not at all. Analyst concerned about 'growth opportunities' Mizuho raised its price target on Tesla to $230 from $180 and affirmed a neutral rating on the shares. More Tesla: The Austin company reported better June-quarter electric-vehicle deliveries, up 15% quarter-over-quarter, while core EV deliveries continued to slow, down 5% year-over-year, the firm said. Mizuho said Tesla is now focusing on new markets with humanoid robots and the robotaxi roadmap, which "could be much more difficult" and challenging versus the company's expectations. The investment firm adjusted its estimates for modestly higher EV deliveries, thinner gross margins with pricing, and modestly higher operating margin with head-count cuts. On July 11, Citi analyst Itay Michaeli raised the firm's price target on Tesla to $274 from $182 and also affirmed a neutral rating on the shares. The analyst has "been more constructive" on near-term investor sentiment around Tesla but said the stock's strong runup adds greater reliance on looming EV product and artificial intelligence catalysts. The second-quarter delivery beat was also "encouraging," which prompted increased estimates and supports Citi's underlying call for improving EV sentiment this summer. But the analyst said that core EV fundamentals alone are unlikely to support significantly further upside in Tesla shares absent new product and AI catalysts. "We're not inclined to chase the stock here," Michaeli said. Related: Veteran fund manager sees world of pain coming for stocks

Tesla Bulls, Bear Weigh In On Robotaxi Delay: 'Very Odd' Or Biding Time For 'Eye-Popping' Prototype? - Tesla (NASDAQ:TSLA)

Bullish analyst termed the negative stock reaction as "knee jerk reaction." Reports of a potential delay in Tesla, Inc.'s TSLA robotaxi unveil punctured the shares on Thursday. Several analysts addressed the ramifications of such an eventuality. Johnson's Take: Tesla bear Gordon Johnson of GLJ Research sensed a far more severe issue than a two-month delay. "If $TSLA is willing to put a man/woman in a leotard for the original unveiling of the Optimus Robot....& pillow sheets over cars that 'are coming' at Battery Day/AI Day, why wouldn't they use a CNC machine to put virtually ANYTHING out for Robotaxi Day UNLESS...," he said in a social media post. Johnson does not subscribe to the idea that the event was delayed to allow more time for vehicle prototypes. "Seems (very) odd to me as a prototype can be made, w/ a CNC machine, in a matter of weeks," he said. Many investors trade around Tesla days/events, which have turned out to be sizeable disappointments, he added. "Now that 'Robotaxi Day 8/8' is not happening as originally scheduled, the folks trading TSLA's stock into this event are likely now sellers," Johnson wrote. Given the 11-session winning streak in Tesla shares that saw the stock add over 44%, Johnson said the selling could be quite material. See Also: How To Buy Tesla Stock Munster, Ives Shrug Off Development: The rumored delay is a reminder that "in the world of Tesla things take longer than expected," said Deepwater Asset Management's Gene Munster. The tech venture capitalist said the shift in timing doesn't change anything. "Tesla is still best positioned to lead in an autonomous future, which will unlock higher margins," he added. Wedbush's Daniel Ives, who was very positive in the runup to the event, termed the negative stock reaction on Thursday as "knee jerk reaction." "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," he said. The two-month delay, Ives said, could just make the actual Robotaxi event and prototypes even "better and more eye popping" for Tesla. The analyst maintained an Outperform rating and $300 price target for Tesla shares. Musk hasn't confirmed or denied the rumor, although in a separate context, he said on X that "the amount of testing time it takes to figure out if the new AI is better than the existing AI as measured by miles between interventions is the limiting factor on progress." "The better FSD gets the longer it takes to find interventions." At last check, Tesla rose 1.58% to $244.85, according to Benzinga Pro data. Check out more of Benzinga's Future Of Mobility coverage by following this link. Read Next: Tesla Bull Says Trump Win Is Negative For EV Industry, But 'Potential Positive' For Elon Musk-Led Company: Here's Why Image: Midjourney Market News and Data brought to you by Benzinga APIs