Analysts say Tesla Inc. shares are moving higher due to Elon Musk saying he will spend more time with the company and enthusiasm surrounding the company’s driverless taxi business.
Tesla shares rallied during early afternoon trading Wednesday, gaining over 6.5 per cent. Bloomberg News reported Tuesday that Tesla signalled caution in its latest earnings release, saying it will revisit its 2025 growth outlook. In the first quarter, the Austin, Texas based firm reported that profits fell by 70 per cent to US$409 million, or 12 cents a share, coming in below analyst estimates according to The Associated Press. Meanwhile revenue fell by nine per cent to $19.3 billion.
“I think the two big things that came out of the conference call was that Elon was going to dedicate more time to Tesla, and then also that the robotaxi and the low-cost models are on track for second half of this year. So those are really the two big drivers, and I think the robotaxi comments specifically, it’s really what the stock hinges on,” Ivana Delevska, founder and CEO of SPEAR Invest, said in an interview with BNN Bloomberg Wednesday.
She added that if the driverless taxi business works out “the stock could easily double from here.”
Seth Goldstein, and equity strategist at Morningstar Research Services, said in an interview with BNN Bloomberg Wednesday that a few factors were driving the stock higher. Firstly, that Musk is planning to spend less time as an advisor to U.S. President Donald Trump and more time running Tesla, an issue that has concerned Tesla investors.
“But then we have other announcements as well. We have first, the affordable vehicle remains on track to enter production by the middle of the year. There was a report earlier this week that the vehicle would be delayed, and I think that vehicle will be needed for Tesla to see deliveries growth,” Goldstein said.
“And then we also have Elon Musk saying that not only will they do robotaxi testing this year, but they expect the product to start generating revenue next year. So that’s a firm timeline from (when) we will actually see robotaxi become a real product and service, not just a concept. And so I think the combination of those three things is sending the stock higher today.”
Tesla’s CEO is increasingly betting the future of the company on autonomous products, including its Cybercab and humanoid robot Optimus, Bloomberg News reported Wednesday.
“The business model for robotaxis is significantly better than the business model for selling vehicles. So I think operating a fleet of autonomous vehicles is going to be much more profitable for the company, that’s really what we’re excited about,” Delevskam said.
‘Brand damage’
Amid concerns among some analysts regarding Musk’s work at the U.S. Department of Government Efficiency and its impact on the Tesla brand, Goldstein said those fears don’t appear to be reflected in sales data.
“When I look to assess brand damage, I first want to look at the macro sales picture and I want to see is Tesla losing sales? And what I saw from the data in the U.S. is January sales were down, but then February and March sales were up year-over-year, and I attribute that to the new refreshed Model Y not being launched until February,” he said.
“When we look at the European declines, I think it’s a very similar story where the Model Y was not yet out in most markets in the first quarter within Europe. I think in China, the issue was, was Tesla’s full self-driving going to be approved for the level two roll out? And it was in the middle of March and we saw sales immediately start to climb once that level of software was rolled out.”
As a result, Goldstein said he expects Tesla to report improved results in the second quarter, indicating that would be Tesla buyers were potentially waiting for the new Model Y or full-self driving software, “not necessarily being turned away due to Elon Musk.”
“Tesla also said on the call last night that they had the most test drives during the first quarter they’ve ever had. Which is a data point that indicates to me that there’s still a good level of consumer interest out there. When I look at the actual data, I don’t see brand damage as evident in the numbers,” he said.
