Shares of Tesla (TSLA) fell more than 7% on Friday afternoon as investors expressed disappointment over the EV maker's robotaxi debut.
After Thursday night's “We, Robot” event — which aimed to cement CEO Elon Musk's position as an AI leader — investors and analysts came away with more skepticism than excitement about Tesla's lofty vision of a future of self-driving taxis.
Jefferies (JEF) analysts called Tesla's $30,000 robotaxi, also called 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 unattended fully self-driving testing next year with Model 3 and Model Y test vehicles in Texas and California. Tesla aims to begin Cybercab production “before 2027,” Musk said.
Tesla's stock slide on Friday extended a two-week decline. Shares of TSLA fell last week after the company missed Wall Street estimates for third-quarter deliveries, issued a recall and discontinued a lower-priced model. The stock – which has seen much more volatility than its Magnificent Seven peers over the past year – is down 17% year-on-year. Still, TSLA's Friday price of $220 per share is far higher than the lows below $140 this spring. Shares hit a 15-month low in April, following Tesla's layoffs and price cuts.
Investors and analysts had hoped the company's highly anticipated 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 bring its Cybercabs to market “vague” and “disappointing.” Morgan Stanley (MS) analysts said the event included a “disappointing lack of detail” on updates to Tesla's FSD technology and market strategy.
RBC Capital analyst Tom Narayan agreed, writing in a note Friday that investors believe Musk's vision “did not take into account real numbers and timelines.”
“These usually come at Tesla events,” he added. “This seemed focused on the branding and marketing of Tesla's vision, rather than providing concrete numbers that we could model.”
Additionally, Tesla has not revealed details about a cheaper vehicle, as some investors had hoped. That vehicle is expected to hit the market in the first half of 2025, analysts noted.
Sure, some Wall Street pundits think “We, Robot” was a success. Bank of America analysts said the robotaxi event “lived up to the hype.”
Wedbush analyst and Tesla bull Dan Ives said in a note Friday, “We believe last night was a glimpse into the future of Tesla and the next generation of consumer transportation.” He also noted the presence of Tesla's humanoid robot Optimus, which was “well ahead” of Wedbush's expectations.
Musk said Optimus could be “[the] largest product of any kind ever” in terms of commercial success, Bank of America (BAC) analysts noted. The AI technology underlying the robot is the same as that used in Tesla's vehicles.
“We think this shows that TSLA is more than a traditional auto company at this point,” Bank of America analysts said.
While Wedbush's Ives noted the lack of details on Tesla's Cybercab rollout, he said:[W]We strongly disagree with the idea that last night was a disappointment, as we would argue the opposite if we saw Cybercab with our own eyes and the vast improvements in Optimus that we had been dealing with all evening.”
Good news for Uber and Lyft
The overall muted reaction to the launch of Tesla's robotaxi is a good sign for ride-hailing companies Uber (UBER) and Lyft (LYFT).
“It's clear that building and launching a service is the longer-term direction for Tesla, but the vagueness around the service (or the clarity of not saying it) may reduce fears that UBER and LYFT will quickly expand their should start defending the stock – which is our primary fear,” said RBC's Narayan. Shares of Uber and Lyft both 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 it, while 20 have a Hold rating and 15 investors recommend selling it. Overall, analysts see the stock falling 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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