The electric vehicle maker’s stock has been on the decline following the reveal of its self-driving robotaxi and humanoid robot Optimus.
This year has been abnormally volatile for shareholders of Tesla (TSLA 0.19%).
Over the summer, investors were set for a preview of the company’s self-driving robotaxi. This was a particularly important product reveal, since many saw the event as the culmination of Tesla’s autonomous driving capabilities and what the company’s future could look like.
But in perhaps a not-so-surprising fashion, CEO Elon Musk abruptly cancelled the event and rescheduled it for Oct. 10. Last Thursday, Tesla finally showed the world what it’s been working on with self-driving cars and humanoid robotics, two important pillars supporting the company’s artificial intelligence (AI) plans.
Since the event, shares of Tesla crashed and are down about 8% at this writing.
Below, I’m going to detail what I think is going on with Tesla and make the case for why now is an opportunity to buy the dip.
You had to be there
Has anyone ever told you a story that they thought was hilarious, but when you didn’t laugh, they said, “I guess you had to be there”? As far as I can tell, that’s what is going on with Tesla right now.
Clearly, investors were uninspired by the robotaxi and Tesla’s humanoid robot, Optimus. But let’s think about this logically: Were you actually at the event, or were you following a live stream on social media?
I would bet you’re in the latter category — invitations to the highly anticipated event were sparse and reserved for famous personalities. It’s hard to make a firm judgment call about anything when you’re observing from afar. So, while you may think the reveal was a bit anticlimactic, here’s what some of Wall Street’s most respected analysts who were in attendance are saying.
Dan Ives of Wedbush Securities covers the technology sector and is frequently a guest on CNBC and other mainstream financial media outlets. Following the robotaxi event, he told CNN that he sees Tesla’s technology as a “game changer.”
Gene Munster at Deepwater Asset Management published a balanced view of the robotaxi event, including his high points and lowlights. Munster is bullish on Tesla’s progress in autonomous driving but says that widescale adoption of the company’s Cybercabs is likely still years away. With that said, he said its self-driving vehicles were “worth the wait.”
As for Optimus, Munster believes these humanoid bots are more than a prototype but still years away from becoming commercialized.
ARK Invest CEO Cathie Wood might just be the biggest Tesla bull out there. As of the time of this article, I haven’t found a firm judgment call regarding her opinion of the robotaxi reveal. But with that said, some of her trading activity could offer some clues.
On Oct. 11, the day after the robotaxi event, ARK purchased 12,730 shares of Tesla in its ARK Next Generation Internet exchange-traded fund (ETF). This is a small buy compared to prior activity by ARK. Moreover, it’s more likely that this purchase was triggered by predetermined buying protocols than by a personal order by Wood or her team.
Nevertheless, I think the sell-off in Tesla might have reached a particular level that ARK deems attractive considering the fund’s long-term outlook surrounding the company.
Image source: Getty Images.
Should you buy the dip in Tesla stock?
I see some common themes in the commentary by Ives and Munster in conjunction with Wood’s recent purchase.
At the end of the day, it seems that some of Tesla’s most experienced analysts are pleased with the company’s efforts overall. While conceding that it will be years before these projects bear fruit, neither Munster nor Ives had anything particularly negative to say.
And I would not be surprised to see ARK buy more shares as Tesla’s stock remains depressed. All three analysts seem to think Tesla is a technology company and not simply an automaker.
To me, Tesla seems well on its way to emerging as a major player in AI over the long run. Bearing that in mind, I think the sell-off presents a good opportunity to take advantage of some depressed pricing.