"Wall Street Disappointed with Musk and Tesla"

Autonomous taxi cabs lack key details, humanoid robots depend on manual control, and the much-anticipated affordable car model is once again absent... Musk's so-called historic press conference ultimately disappointed Wall Street.

Tesla's stock plummeted overnight in the US market, falling more than 10% at the beginning of trading.

At the Robotaxi Day event held on Friday, Tesla's autonomous taxi prototype, Cybercab, and the autonomous bus, Robovan, were officially unveiled. According to Musk, Cybercab might be sold to taxi dispatch companies when it hits the market "before 2027."

Musk also stated that he expects Tesla vehicles to achieve full self-driving capabilities in Texas and California next year, with the mass production price of the humanoid robot Optimus ranging from $20,000 to $30,000, and the Cybercab priced below $30,000.

"Is that all?" asked Morgan Stanley analyst Adam Jonas in his latest report:

We tested the Cybercab and the latest robot Optimus on closed courses, and beyond that, we were expecting to receive updates on Tesla's Full Self-Driving system (FSD), such as improvements in system performance, and Tesla's strategic planning for launching supervised and unsupervised ride-sharing services, including economic considerations and overall market analysis. We also hoped to hear about Tesla's collaboration with AI company xAI or discussions on the company's future development plan, the "Master Plan, Part 4."

Advertisement

However, these expectations were not met, and Jonas was disappointed with the information and details provided by the event.

No surprises, just disappointments.

Jonas also pointed out that Optimus performed some simple tasks, such as pouring beer and dancing, but these models did not operate entirely autonomously and required close human supervision and remote operation.Our understanding is that these robots are not fully autonomous in operation—instead, they rely on remote control (human intervention), so this is more of a demonstration of their degrees of freedom and flexibility.

Overall, we did not find anything new/novel in Optimus, clearly showing significant progress, including minor details previously unknown to the market.

In addition to Morgan Stanley, analysts from major banks such as UBS and JPMorgan also expressed dissatisfaction with the event.

UBS analyst Alejandro Nuno reviewed his experience riding in the Cybercab, stating that the experience was good, but not much useful information was obtained:

The car is small, but spacious for two people. However, the car just made a lap around the stage. Not complicated, so there is not much to interpret.

In fact, when our trip arrived at the designated stop, it could not find a parking space (none available), so it did not wait for a spot but continued to the next stop on the route.

Nuno believes that the Robotaxi event is far from meeting Wall Street's expectations.

At the same time, we believe that expectations for Tesla to showcase the Model 2.5 are high, but it was not shown (in line with our expectations). This is important because we believe that new models are more likely to drive performance expectations for 2025/2026 than new products showcased at the event.

After attending the event, JPMorgan analyst Ryan Brinkman meaningfully stated that it is better to enjoy the process of riding in the Cybercab rather than expecting the surprise of arriving at the destination. This statement implies that the self-driving capabilities of the Cybercab may not have met expectations.

He pointed out that since April 22nd, although Tesla's stock price has risen by 68%, market expectations for the number of cars Tesla will sell in 2024, EBIT (earnings before interest and taxes), and free cash flow have significantly decreased. Forecasts for the next few years are also not optimistic, and the stock price increase seems to be more based on investors' expectations for Robotaxi Day rather than an improvement in the company's fundamentals.Brinkman believes that investors may have overly high expectations for Tesla, which can be inferred from the way the event was announced:

The event was not announced through an official press release, an official Tesla tweet, or a tweet from Musk himself, but rather was mentioned by Musk in a reply to someone else's tweet on platform X. This method was informal and somewhat casual.

In his reply, Musk seemed to be refuting a Reuters report that claimed internal Tesla emails showed the anticipated $25,000 "Model 2" project had been canceled or indefinitely postponed. Musk stated that the Model 2 project had not been canceled but had been repositioned as a robot taxi and would be revealed at Tesla's Robotaxi Day.

Musk's reply tweet successfully reversed the downward trend in Tesla's stock price on April 8th caused by the Reuters report. However, investors may have placed too much importance on this tweet without realizing that it does not equate to an official company statement.

Additionally, Tesla has postponed the date of Robotaxi Day from August 8th to October 10th, citing the need for design changes. This may indicate that the Tesla team is striving to meet a challenging deadline that may not be as easily achievable as they anticipated.

Tom Narayan, a financial market analyst at RBC Capital Markets in New York, pointed out that investors found the event disappointing for its lack of concrete financial figures and timelines (particularly the absence of the much-anticipated affordable car model), focusing instead on branding and marketing Tesla's vision.

Nevertheless, Narayan remains optimistic about Tesla's long-term development and believes that humanoid robots could become an important growth point for Tesla in the future.

Tesla's stock price falls, while Uber "accidentally wins" and soars to a new high

The market was not satisfied with Musk's Robotaxi report, leading to increased optimism in Uber and ride-sharing company Lyft.On Friday, Uber's stock price once surged by more than 10.5% to reach a historical high, while Lyft's stock price once increased by more than 11.3%.

Citi analyst Ronald Josey said:

"Tesla's event has provided us with a clearer understanding of the company's plans and timelines for autonomous taxis, which makes us more optimistic about Uber's stock. The lack of specific details on the sales of Cybercab and ride-hailing applications leads us to believe that Tesla may still cooperate with Uber for sales in the future."

Jefferies analyst John Colantuoni believes:

"This event is good news for Uber. He called Tesla's taxis 'uncompetitive' and pointed out that the company has not provided any verifiable evidence of its progress in autonomous driving functions, nor has it clarified how many autonomous taxis it plans to manufacture."