Back in 2004, Will Smith starred in the film I, Robot. Set in 2035, he navigates a world filled with advanced artificial intelligence and autonomous robots that turn against humans and try to destroy them. Twenty years ago, this seemed like a futuristic vision, and an insane idea for the world.
But following Tesla Inc.’s (TSLA) Robotaxi event on October 10, this world doesn’t seem so crazy (minus the murderous AI robots).
Just like the film’s vision of a society reliant on AI machines, Tesla is pushing the boundaries of what we thought possible in our daily lives. In fact, much of the technology Tesla has recently unveiled is eerily similar to that in the film. Just take a look at the image below, from the robots to the cars, we are seeing all the advanced technology from I, Robot in our world now.
Source: Silicon UK
In other words, what was once thought of as a distant future is now becoming a reality. And Tesla is one of a handful of companies at the helm of this future. Given this, I want to take some time today to share my thoughts on the Robotaxi event and highlight the moves Tesla is making to bring the future to our present.
Plus, Tesla just released its latest earnings report yesterday, so we will also review its quarterly results – and I’ll tell you if it’s a good buy right now.
Robotaxi: Ride Into the Future
About three weeks ago, Tesla CEO Elon Musk took the stage for Tesla’s Cybercab event. It was a well-choreographed affair that introduced not only Tesla’s Robotaxi but also its Robovan and Optimus robot.
Tesla’s Cybercab has a very innovative design, a sleek model with two seats and no steering wheel or driving pedals. The Robovan is designed to carry up to 20 people and/or deliver cargo. And the Optimus robot served drinks at the event and was pitched to be able to do household chores.
Now, the Cybercab will be first rolled out in California and Texas for testing, just like Alphabet Inc.’s (GOOG) Waymo taxis are all over San Francisco. Personally, I have experienced the best autonomous system in General Motor Company’s (GM) Super Cruise, but it only works on selected highways.
I should also mention that there are questions about the safety of Tesla’s Cybercab. Tesla’s autonomous vehicles like the Cybercab rely on cameras instead of LiDAR (which senses heat for pedestrians and animals) – and there have been a lot of documented crashes.
Plus, city driving remains much more challenging to an autonomous driving system. But if Tesla’s Cybercab catches on in Austin and San Francisco, it could be a big success for Tesla.
Tesla noted that testing in California and Texas won’t begin until 2025, and vehicles won’t be produced before 2027. So, the availability of the Cybercab is still a few years away.
Overall, Tesla’s Robotaxi event was interesting, and Elon Musk may have a winner on his hands in the long run. But for the Cybercab to work, he will need to sort out the safety issues and have positive tests in California and Texas next year.
Despite the long-term potential, the Robotaxi event failed to wow investors, which triggered a 9% drop in the stock the following day.
Full Charge Ahead
Thankfully, Tesla’s third-quarter earnings report yesterday evening has the stock firing on all cylinders again.
For the third quarter 2024, Tesla reported earnings of $0.72 per share, up from earnings of $0.53 per share in the same quarter a year ago. Revenue rose nearly 8% to $25.18 billion, up from revenue of $23.35 billion a year ago.
The analyst community anticipated earnings of $0.60 per share and revenue of $25.67 billion. So, Tesla posted a 20% earnings surprise and a slight revenue miss. But revenue is rising, up from roughly $25.1 billion in the second quarter and $23.4 billion in the same quarter last year.
Most important to investors, however, was Tesla’s margin growth. You may recall that Tesla slashed its prices earlier this year as appetite for EVs in the U.S. slowed and competition in the EV space accelerated, as upstart Chinese EV companies began to enter the global competition. As you can see in the chart below, Tesla has been suffering from margin compression in recent years.
But Tesla reported improving profit margins in the third quarter, which rose to 19.8%. That’s the best margin in nearly two years, and it beat expectations for 16.8%.
Additionally, during the earnings call, Tesla CEO Elon Musk stated the company is “on-track to deliver more affordable models starting in the first half of 2025.” He recognized that most folks are probably wondering what they can expect for vehicle sales growth next year, saying that his “best guess” was somewhere around 20-30%.
Musk also confirmed that Cybercab would reach volume production in 2026, saying that:
We’re aiming for at least 2 million units a year of Cybercab. That’ll be in more than one factory, but I think it’s at least 2 million units a year, maybe 4 million ultimately.
Wall Street cheered this good news and Tesla stock surged more than 20% in trading today.
Is It Time to Put the Pedal to the Metal on Tesla?
So, now that things seem to be looking up for Tesla, is it a buy?
Well, if we look at my Stock Grader tool (subscription required), the answer is no. As you can see below, Tesla currently holds a Total Grade of D, meaning it is a “Sell.”
In fact, Stock Grader has had Tesla at a D-rating for a majority of the year… long before its Robotaxi event and most recent earnings report.
The bottom line: Now is not a good time to buy Tesla. I would wait for its fundamentals to improve further before investing in the company.
Mark This Date on Your Calendar
Before you go, I want to formally invite you to my “Day After Summit” on Tuesday, October 29, at 7 p.m. Eastern time.
During this summit, I will be joined by Freeport Society’s Chief Investment Strategist, Charles Sizemore. We will be focusing on the day after Election Day, when the uncertainty, political strife and market volatility will begin again. And we want to share how you can turn the market chaos that is coming to your advantage.
We will even be giving away a post-election trade for free. It’s designed to pay off no matter who wins the election.
You won’t want to miss this discussion. To reserve your spot today, simply click here now.
I look forward to seeing you there!
Sincerely,
Louis Navellier
Editor, Market 360
