Countdown: Less Than 1 Day Until Robotaxi Launch! How Will It Impact Tesla’s Stock Performance?

Tesla (TSLA.US) to Host Highly Anticipated Robotaxi Day on October 10th

Tesla is set to host its much-anticipated Robotaxi Day on October 10. The event will unveil its long-delayed autonomous taxi, drawing massive attention from the public. Elon Musk has described this event as “historic,” and many speculate it could be the biggest event in the company’s history. Some have even posted that it might be Tesla’s “most crucial moment” since the launch of Model 3, to which Musk enthusiastically responded, “yes.”

Originally scheduled for August 8, the event’s repeated delays have heightened public interest. The announcement of the postponement previously caused a significant dip in Tesla’s stock price, highlighting the market’s anticipation for this event.

What Impact Could the Event Have on Tesla’s Stock?

Investors are eager to see the potential impact of this announcement on Tesla’s stock price. Historically, Tesla’s major product launches have led to significant stock fluctuations. In March 2016, Tesla’s stock rose 12% within five days after unveiling the Model 3. Conversely, after the 2022 AI Day, which introduced the Optimus humanoid robot, Tesla’s stock fell 16% within the same timeframe. On September 5, 2024, Musk’s announcement of Optimus production starting next year resulted in a 4% stock surge.

From a long-term perspective, Tesla’s stock usually experiences substantial growth within a year after major product launches.

Options Market Signals: Bulls vs. Bears

Examining the overnight options chain, there’s evident tension between bulls and bears. Options expiring on October 11, right after the event, show high volume for Call contracts at strike prices of $250 and $245, with 40,000 and 37,000 contracts traded, respectively. Similarly, high volumes are observed for Put contracts at strike prices of $240 and $242.5, with 24,000 and 21,000 contracts, respectively.

What to Expect from the Event?

Some analysts suggest that while Robotaxi Day appears to focus on showcasing autonomous driving technology, Elon Musk must convince investors that Tesla is a “tech company” rather than a mere “car manufacturer.”

Mark Delaney from Goldman Sachs believes the event will focus on two critical aspects: the commercialization timeline of Tesla’s Robotaxi, including technological, operational, and regulatory details; and the potential unveiling of a low-cost Model 2 vehicle priced at $25,000, or at least providing more information about it.

Cybercab Prototype Expectations

One of the event’s highlights is the anticipated reveal of the autonomous taxi prototype, potentially named “Cybercab.” Leaked images suggest Tesla’s Robotaxi could be a compact, two-door, two-seater vehicle featuring Cybertruck’s signature taillights. It may also include automatic charging, disinfection capabilities, and fleet management features, equipped with Tesla’s latest Full Self-Driving (FSD) technology. Regarding its launch timeline, Musk mentioned during Tesla’s Q2 earnings call that Robotaxi could roll out by year’s end or, at the latest, next year.

To accelerate Robotaxi commercialization, Tesla might announce partnerships with Uber for ride-hailing services and McDonald’s for food delivery. McDonald’s recently hinted at a collaboration with a cryptic post stating, “Chat begins on 10.10,” which Musk responded to with a laughing emoji.

The Market’s Reaction and Concerns

Experts note that showcasing technology alone might not be enough to ease market concerns. Tesla needs to clearly outline its commercialization strategy for autonomous taxis to alleviate investor worries about long-term profitability.

Optimus Updates

The event’s official theme, “We, Robot,” suggests updates on Tesla’s humanoid robot project, Optimus. The market eagerly anticipates seeing its latest advancements, including its applications and technical capabilities.

Model 2 Unveiling Speculation

Investors are also speculating whether Tesla will introduce the affordable Model 2 at this event. With a starting price below $30,000, this model could significantly expand Tesla’s potential market, especially as its current sales show signs of slowing.

Wall Street’s Take on Tesla

Morgan Stanley, known as a “Tesla bull,” continues to support Tesla, citing the revenue potential from Robotaxi and FSD subscription income. The firm has reaffirmed its “Overweight” rating for Tesla and set a 12-month price target of $310, one of the highest on Wall Street. They emphasize that Robotaxi symbolizes Tesla’s shift toward hardcore AI and robotics.

Deutsche Bank, historically skeptical about Tesla, has recently issued a rare positive report, reinstating a “Buy” rating for Tesla and placing it as a top pick in the automotive sector. The bank, which had long held a “Neutral” or “Sell” stance, now tracks Tesla’s price target at $295 over the next 12 months.

Cathie Wood, Tesla’s most prominent supporter and founder of Ark Invest, believes Tesla’s market cap could exceed $8 trillion. Ark’s latest forecast for Tesla’s stock price is $2,600 by 2029, driven by the expected dominance of Tesla’s AI-powered Robotaxi network, contributing to nearly 90% of the company’s valuation and profits.

Al Root from Barron’s writes that October 10th will determine whether Tesla reclaims its position among the top seven U.S. tech giants or becomes an ordinary automaker competing with numerous electric vehicle brands.

The Role of Elon Musk and Market Sentiment

Some believe that the success or failure of Robotaxi Day largely hinges on Musk. Tesla critics argue that he is diverting investors’ attention from the company’s core issues, such as declining sales, increased competition, and profitability challenges in the EV market.

Furthermore, several Tesla executives, including four of Musk’s direct reports, have resigned since October, raising concerns among investors.

The market generally views Robotaxi Day as more than just a tech showcase; it is Tesla’s opportunity to declare its market position, innovation capabilities, and future strategy. If Tesla can seize this moment successfully, it could reinforce its leadership in the global mobility sector. Otherwise, it might face heightened market skepticism.