Tesla’s robotaxi event is ‘stunningly absent on detail,’ sending stock lower – MarketWatch
Uber Technologies Inc. saw its stock rise by 10.81% on Friday, October 11, 2024, while Tesla Inc.’s shares tumbled by 8.78% following Tesla’s much-anticipated Robotaxi Day event. Investors had been hoping for groundbreaking updates from Tesla, but the event left them wanting more, leading to a shift in favor of Uber.
Thomas Martin, senior portfolio manager at GLOBALT Investments, explained the market’s reaction, highlighting the contrasting long-term and short-term implications for the two companies. “Both Tesla stock and Uber reacted the way you would have expected after Tesla’s robo-day. Uber gained the short-term benefit as Tesla failed to meet investor expectations,” he said. He also noted that while Tesla’s long-term potential in automated vehicles could be a threat to Uber, the immediate lack of clear timelines gave Uber room to advance in the ride-hailing space.
During Tesla’s event, the company revealed updates on its autonomous driving technology, but many investors were left disappointed by the lack of detailed information regarding the rollout of its robotaxi service. Tesla’s ambitious robotaxi vision has been on the radar for years, but Friday’s event offered few assurances about when it would become a reality. As a result, investors shifted their focus to Uber, whose business is seen as more stable and predictable in the near term.
Julie Hyman, a host at Yahoo Finance, noted that this latest development may benefit Uber by allowing it to remain the dominant player in the ride-hailing industry, at least until Tesla can make more substantial strides in autonomous driving technology.
Barbara Doran, CEO of BD8 Capital Partners, echoed this sentiment, advising investors to focus on Uber rather than Tesla for now. “Uber is dominating the market with 76% of the ride-share industry, while Lyft is lagging behind with just 23%. Tesla’s robotaxi unveiling doesn’t pose an imminent threat, so Uber remains the better bet,” Doran said. She also pointed to Uber’s strong financials, including a free cash flow of $1.7 billion and a $7 billion share buyback authorization.
Doran did acknowledge that consumer spending patterns could pose a risk to Uber’s continued growth, especially in the current economic climate. However, she emphasized that Uber’s diversified business model, which includes food delivery and freight services, provides a buffer against potential downturns in ride-hailing demand.
Tesla’s situation, on the other hand, appears to be more complex. While the company remains a leader in electric vehicle production and is pushing hard on the autonomous driving front, its robotaxi service seems far from being fully realized. Investors had been hoping for more concrete milestones during Friday’s event, but instead, Tesla CEO Elon Musk offered a vague outlook that raised more questions than answers.
One of the key challenges for Tesla’s robotaxi project is the regulatory environment. Autonomous vehicles are still heavily regulated, and widespread adoption is likely to take several more years. Without clear timelines or regulatory approvals, Tesla’s vision of a fully autonomous ride-hailing fleet remains speculative.
As the details of Tesla’s robotaxi project continue to unfold, Uber is expected to strengthen its position in the market. The company has been focusing on improving its core business, increasing market share, and enhancing profitability. It also continues to innovate in areas like electric vehicles and partnerships with autonomous vehicle developers, allowing it to stay competitive in a rapidly evolving industry.
Lyft, another player in the ride-hailing space, has also struggled to keep pace with Uber. Doran advised investors to avoid Lyft stock, citing its smaller market share, weaker financials, and high debt-to-equity ratio. “Lyft’s underperformance compared to Uber is significant, and it’s going to be tough for them to catch up. Their new management team may bring some improvements, but it will take time,” she said.
In summary, Tesla’s underwhelming Robotaxi Day event has given Uber an opportunity to further solidify its dominance in the ride-hailing industry. Investors who had been banking on Tesla’s autonomous vehicle future are now reconsidering their positions, shifting their focus to Uber’s more immediate growth prospects. While Tesla’s long-term vision remains compelling, the road to full autonomy is likely to be longer than initially anticipated, and Uber stands to benefit in the meantime.
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