Al Root
Tesla investors are hoping for something big for the company on Thursday, but its highly anticipated Robotaxi Day will affect more than the electric-vehicle maker's shares.
Tesla stakeholders will gather in Hollywood to hear management talk about autonomous-driving technology. Wall Street expects Tesla to unveil a physical robotaxi, maybe providing some driverless rides on a Hollywood lot; review the state of Tesla's self-driving tech, including safety data; describe its planned robotaxi business model; and give some indication of when a Tesla robotaxi might be on roads.
Some analysts are hoping for something extra, such as the unveiling of a lower-priced Tesla car, typically referred to as the Model 2.
A look at the numbers shows how important this is for the company and the auto industry. Americans drove about 3.2 trillion miles in 2023. If technology can do the driving instead, it would unlock hours of time previously spent with eyes on the road and hundreds of billions in revenue for the company making that possible.
More companies than Tesla, however, stand to benefit from advancing autonomous-driving technology. Several firms can gain from the halo effect created by the Tesla event.
Autonomous vehicles, or "AVs are now on the road in several metropolitan markets in the U.S. and across the globe," wrote KeyBanc analyst Justin Patterson. Several companies, including Alphabet's Waymo, have small and growing robotaxi businesses operating in several cities.
He pointed out that Alphabet stock is trading at a discount to its historical valuation, likely due to antitrust concerns, even though Waymo is completing more than 100,000 self-driving cab rides a week. "As investors become more comfortable with Waymo, we suspect this could provide more valuation support," Patterson said.
If Tesla raises awareness of the potential for robotaxi tech, it could help investors to become more comfortable with Waymo.
Two other firms benefiting from robotaxis are the ride-hailing companies Uber Technologies and Lyft. They have the networks and technology required to integrate robotaxi into their fleets.
"Uber has been the first to get AV partners on board, with several new partnership announcements since second-quarter earnings," Patterson wrote. Those include Waymo, General Motors' Cruise, and Wayve. "For Lyft, we believe investors will need to see more partners start to come on board to get more comfortable with its AV strategy."
Patterson rates Alphabet stock at Buy and has a $200 price target for the shares. His rating and price target for Uber are Buy and $90, respectively. He rates Lyft at Hold and has no target for the price.
Alphabet stock was down 0.1% in early trading Monday. The S&P 500 and Dow Jones Industrial Average were off 0.3% and 0.2%, respectively. Tesla shares dropped 2.2%, while GM shares rose 0.3%.
Uber shares gained 1.6% in response to news that Truist analyst Youssef Squali raised his target for the stock price to $99 from $88 and kept a Buy rating on the company. Lyft shares fell 0.7%.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
October 07, 2024 11:39 ET (15:39 GMT)
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