Tesla's Robotaxi Reveal Raises Concerns About Future Growth

Tesla Inc. has recently revealed its much-anticipated robotaxi, but the event has not met expectations from investors, leading to worries about the automaker's growth trajectory.

What Happened: Analysts at Jefferies highlighted that the unclear presentation surrounding the robotaxi technology has redirected attention toward Tesla's primary automotive business. This shift has raised questions about the company's governance and future funding possibilities.

Jefferies has increased its price target for Tesla shares from $165 to $195 while retaining a Neutral rating. The firm anticipates a rise in cash flow over the next two years but cautions that growth will be subdued for at least that period. This is partly due to the aging of Tesla's core vehicle models and difficulties in refreshing their product line.

The brokerage expressed disappointment over the Cybercab reveal, noting it lacked "tangible progress" on the underlying technology and did not provide sufficient information regarding potential revenue generation from the new service. As a result, the focus has shifted back to Tesla's automotive sector, which is facing challenges with delayed deliveries and is expected to see a drop in deliveries for the first time in 2024.

Jefferies analysts described Tesla as resembling an "imbalanced VC portfolio" that is heavily reliant on an auto business facing pressures. The company is to report its earnings for the third quarter soon, which may shed light on its demand trends and strategies connected to the Cybercab project.

Why It Matters: The struggles Tesla faces today are part of a broader story involving price cuts. To prevent its first annual decline in deliveries, Tesla has offered discounts of up to $4,000 on certain Model Y and Model 3 vehicles in the United States.

Investors are looking forward to the upcoming earnings report for more insights into market demand and the company's plans. Some analysts have noted a renewed emphasis on Tesla's foundational business after what was generally viewed as a lackluster Robotaxi Day presentation.

Price Action: On Monday, Tesla shares closed at $218.85, reflecting a decrease of 0.84% for the day, with an additional drop of 0.16% in after-hours trading. So far this year, the stock has declined by 11.90%, based on Benzinga Pro data.

Photo courtesy: Tesla

Tesla, robotaxi, growth