Tesla Disappoints Investors with We Robot Event
Investors eagerly awaiting positive news on Tesla’s robotaxi opportunity, low-price model, and FSD technology were left wanting more after the We Robot event in early October. The event failed to deliver concrete details, leaving the market with more questions than answers. Key takeaways from analyst commentary include:
- No announcements on capability or new near-term opportunities
- The Optimus robot required human assistance
- Credibility took a hit due to lack of substantial updates
Market response to the event was lukewarm, with several analysts revising ratings and price targets downward. The consensus remains a Hold with a price target of $210, but recent trends suggest a possible 20% downside for Tesla stock.
Despite the lackluster event, Wedbush’s Dan Ives remains optimistic, focusing on potential advancements expected in 2025. His stock price target of $300 is among the highest issued by major firms. However, with Tesla’s stock price currently under pressure, a 20% decline this year seems likely.
Challenges in the U.S. Automarket Spell Trouble for Tesla
While electric vehicle sales are booming in China, Tesla is facing challenges in its core market, the U.S. S&P Global forecasts limited growth and rising pressure for OEMs like Tesla, citing economic headwinds and falling average selling prices. Key points to note:
- Industry growth expected at 1% to 2% with little margin improvement
- 6% to 8% decline in average vehicle prices, driven by lower-cost EV models
Uber emerges as a potential winner from Tesla’s event, with analysts seeing it as well-positioned to capitalize on the FSD/autonomous market. Jefferies analysts highlight Uber’s advantage in supporting autonomous OEMs as they develop their technology.
Analysts Trim Estimates for Tesla’s Future Performance
Analysts have been revising their estimates for Tesla’s Q3, Q4, and 2024, but remain overly optimistic given macroeconomic challenges and slow progress on key projects. The consensus expectations for growth are:
- 10% YOY growth in Q3 accelerating to 16% in 2025
- Forecasts may need to be adjusted downward in the coming quarters
Tesla’s stock price fell 10% post-We Robot event, testing support levels. Continued downward movement could see the stock break critical support near $215 and potentially drop to $180.
Analysis:
Tesla’s disappointing We Robot event and the subsequent tepid market response underscore the challenges the company faces in delivering on its ambitious projects. The lack of concrete updates on key initiatives like the robotaxi opportunity and FSD technology has raised concerns among investors and analysts.
The broader headwinds in the U.S. automarket, coupled with increasing competition and economic uncertainties, pose significant obstacles for Tesla’s growth prospects. As the company navigates these challenges, it will be crucial for investors to monitor its progress closely and adjust their expectations accordingly.
With analysts revising their estimates and stock price targets, it is evident that the market sentiment towards Tesla is shifting. The company’s ability to address the current issues, accelerate key projects, and demonstrate sustainable growth will be key determinants of its future performance.
For investors, staying informed about Tesla’s developments, industry trends, and market dynamics will be essential in making informed decisions about their investment portfolios. By understanding the factors influencing Tesla’s stock price and performance, investors can better position themselves to navigate the evolving landscape of the electric vehicle market.