On Wednesday, Bernstein, a research group within SocGen, maintained its Underperform rating on Tesla (NASDAQ:TSLA), currently trading at $351.42, with a steady price target of $120.00. According to InvestingPro data, Tesla's stock has shown remarkable momentum with a 101% surge over the past six months, though analysis suggests the stock is currently trading above its Fair Value.
The focus of the skepticism centers around Tesla's strategy to develop a dedicated 'Cybercab' rather than expanding its range of general-purpose vehicles equipped with self-driving technology.
The firm outlines the considerable risks involved in such a strategic choice, which hinges on the successful operation and broad regulatory approval of Tesla's self-driving technology, as well as a significant shift in consumer behavior from owning personal vehicles to opting for robotaxi services.
Bernstein's analysis suggests that Tesla is making a "bet the farm" decision that limits future flexibility. A general-purpose vehicle could serve the same market needs—selling cars and Full Self-Driving (FSD) capabilities—if Tesla's ambitious plans come to fruition. However, it would also provide Tesla with more strategic options should any of the three critical success factors not materialize.
The firm estimates that a potential robotaxi network could be valued at approximately $200 billion, comparing it to the current market capitalizations of Uber (NYSE:UBER) at around $150 billion and Waymo at $45 billion.
Tesla could also profit from the sale of Cybercabs, which would inherently include FSD technology, potentially adding about $10,000 in profit per vehicle. With Tesla's current market capitalization of $1.13 trillion and a P/E ratio of 87.59, InvestingPro analysis reveals 20+ additional key insights about Tesla's valuation and growth prospects.
Bernstein theorizes several reasons for Tesla's focused approach on a robotaxi solution. It could be a new stretch goal set by CEO Elon Musk for his team or simply the latest "shiny toy" following other projects like the Roadster, Semi, and Cybertruck.
Alternatively, Tesla may view the Cybercab as an intermediate solution if it cannot directly achieve Level 5 autonomy, or it might be the quickest path to producing a $25,000 car, with the Cybercab envisioned as a 2-seater vehicle to reach that price point.
While analyst targets range from $116 to $411, Tesla maintains a "GOOD" financial health score according to InvestingPro's comprehensive analysis, which offers detailed insights through its Pro Research Report, available with a subscription.
In other recent news, Tesla has seen a flurry of activity from analysts and regulatory bodies. Roth/MKM upgraded Tesla's stock from Neutral to Buy, driven by growing enthusiasm for electric vehicles and a favorable regulatory environment. The company's strong financial performance, with $97.15 billion in revenue over the last twelve months, likely contributed to this upgrade.
Tesla's potential growth in the autonomous vehicle market and its CyberTaxi initiative were also highlighted, with Wedbush Securities maintaining an Outperform rating on the company, emphasizing its strong financial position and potential growth in the AI and autonomous driving space.
In legal developments, Tesla and JPMorgan Chase (NYSE:JPM) & Co. have mutually agreed to drop their ongoing lawsuit, centered around a 2014 stock warrant transaction and a tweet from Tesla CEO Elon Musk. The details of any settlement reached were not disclosed.
In the realm of technology, Neuralink, co-founded by Elon Musk, has initiated the CONVOY Study. This trial aims to integrate brain-computer interface technology with an assistive robotic arm, a significant step toward helping individuals with severe physical limitations regain control over digital and physical environments.
In regulatory developments, California Governor Gavin Newsom has announced plans to potentially reinstate the state's Clean Vehicle Rebate program. However, Tesla could be excluded from the new state rebates, a move that could impact the company's operations in the state. These are the recent developments impacting Tesla.
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