Tesla stock falls as 'toothless' robotaxi disappoints

Shares of Tesla (TSLA) fell more than 7% midday Friday as investors expressed disappointment in the electric vehicle maker's robotaxi debut.

After Thursday night's “We, Robot” event aimed at cementing CEO Elon Musk's position as a leading AI expert, investors and analysts were more skeptical than enthusiastic about Tesla's lofty vision of a future with driverless taxis.

Analysts at Jefferies (JEF) called Tesla's $30,000 robotaxi, the Cybercab, a “toothless taxi” in a note to investors Friday morning, adding that Tesla has “ambitious goals” with “little evidence of feasibility.” .

“We believe TSLA may be underestimating the obstacles to scaling a robotaxi fleet,” they wrote.

Tesla's new Cybercab has no steering wheel or pedals and is designed to be fully autonomous, Yahoo Finance's Pras Subramanian reported. The company said it will begin unsupervised full self-driving (FSD) trials with Model 3 and Model Y test vehicles in Texas and California next year. Tesla aims to begin cybercab production “before 2027,” Musk said.

Tesla's stock decline on Friday extended a two-week decline. TSLA shares fell last week after the company missed Wall Street estimates for its third-quarter shipments, issued a recall and discontinued a cheaper model. The stock — which has seen far more volatility over the past year than its “Magnificent Seven” competitors — is down 17% from a year ago. Still, TSLA's Friday price of $220 a share is well above this spring's lows below $140. Shares hit a 15-month low in April amid layoffs and price cuts at Tesla.

Investors and analysts had hoped that the company's long-awaited robotaxi event would live up to the hype, but were disappointed by Musk's lack of clarity on how the company would achieve its ambitious goals.

Raymond James (RJF) analyst Josh Beck called Tesla's plan to commercialize its cybercabs “vague” and “disappointing.” Analysts at Morgan Stanley (MS) said the event included a “disappointing lack of detail” about updates to Tesla's FSD technology and market strategy.

Tom Narayan, an analyst at RBC Capital, agreed, writing in a note Friday that investors believed Musk's vision was based “in light of real numbers and timelines.”

“These usually take place at Tesla events,” he added. “This seemed to be about branding and marketing Tesla’s vision rather than providing concrete numbers that we could model.”

Additionally, Tesla did not provide details on a cheaper vehicle, as some investors had hoped. According to analysts, this vehicle is expected to hit the market in the first half of 2025.

To be sure, some Wall Street pundits consider “We, Robot” a success. Analysts at Bank of America said the robotaxi event “lived up to the hype.”

The story continues

Wedbush analyst and Tesla bull Dan Ives said in a note on Friday: “We believe last night provided a glimpse into the future of Tesla and next-generation transportation for consumers.” He also pointed to the presence of Teslas humanoid robot Optimus, which “significantly exceeded” Wedbush’s expectations.

According to analysts at Bank of America (BAC), Optimus could be “(the) biggest product of any kind” in terms of commercial success, according to Musk. The AI ​​technology underlying the robot is the same as that used in Tesla's vehicles.

“We believe this suggests that TSLA is currently more than a traditional automotive company,” Bank of America analysts said.

While Wedbush's Ives pointed out the lack of details on Tesla's Cybercab launch, he said: “We strongly disagree with the suggestion that last night was a disappointment, as we would argue the opposite if we were with Cybercab.” “We would see with our own eyes and the massive improvements in Optimus.” We talked all evening.”

Good news for Uber and Lyft

The overall muted response to Tesla's robotaxi launch bodes well for ride-hailing providers Uber (UBER) and Lyft (LYFT).

“Building and launching a service is clearly the longer-term direction for Tesla, but the vagueness of the service (or the clarity of not saying it) could reduce fears that UBER and LYFT would soon have to start defending their shares – which was the case with us.” “The primary fear comes in,” said RBC's Narayan. Shares of Uber and Lyft each rose about 10% on Friday.

Wall Street has mixed opinions on Tesla stock. About 26 of the Wall Street analysts tracked by Bloomberg recommend buying, while 20 have a hold rating and 15 advise investors to sell. Analysts expect shares to fall to $216.59 over the next 12 months, according to Bloomberg consensus data.

Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.

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