What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) fell 9% in the morning session after the 2024 Robotaxi event fell below market expectations. CEO Elon Musk showed up at the event in the much anticipated self-driving Cybercab, which has no steering wheels or pedals. The Cybercab also discards the old charging system using plugs for a newer inductive charging process, which works like refilling a car's gas tank without ever touching the nozzle. However, the Cybercab, which is expected to cost below $30,000 a piece, won't be available to consumers until 2027. In addition, Tesla is expected to start its Robotaxi business as early as 2025 in Texas and California, using the Model 3 and Model Y. The company also unveiled the Robovan, a 20-seater that can also be used to transport goods.
Following the event, Wall Street analysts expressed a wide range of concerns. Barclays highlighted the lack of updates on near-term growth opportunities as the Robotaxi service won't be available until 2025. Morgan Stanley also highlighted the dearth of data on "rate-of-change on FSD/tech, ride-share economics, and go-to-market strategy." Given these concerns, the analysts expect shares to come under pressure in the coming quarters.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Tesla? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 96 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 4.2% as equities soared (Nasdaq +0.9%, S&P 500 +0.55%) after The Bureau of Labor Statistics reported nonfarm payrolls for September 2024, which exceeded expectations. Notably, nonfarm payrolls increased by 254,000, significantly surpassing the consensus estimate of 150,000. In addition, the unemployment rate clocked in at 4.1%, slightly below analysts' expectations of 4.2%.
Overall, the report supports the Fed's favored "soft landing" narrative, suggesting that inflation can be controlled without significantly harming the economy.
Tesla is down 11.8% since the beginning of the year, and at $219.35 per share, it is trading 16.7% below its 52-week high of $263.26 from July 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $13,272.
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