A Tesla Inc. TSLA Robotaxi Day event could significantly impact Uber Technologies UBER stock price and future valuation. Analysts outline both the bullish and bearish scenarios, explaining how Tesla’s event could benefit Uber’s long-term growth and boost the valuation of the autonomous vehicle sector.
The Uber Analysts: Bank of America analysts Justin Post and Michael McGovern reiterate a Buy rating with an $88 price target on Uber ahead of Tesla's Robotaxi Day.
The Uber Bull Case: The analysts see Tesla's Robotaxi Day increasing the value of Uber's network, which could provide a short-term boost and be a long-term concern for competition.
"We think AVs will be market expanding, and a highly competitive market for AVs will make Uber's network more valuable as AV companies look to establish and improve their technology," the analysts said.
The analysts cite the state of California having 32 companies with permits related to autonomous vehicles.
"We think Uber's recent partnership announcement with Waymo, Cruise, and WeRide support our view on a competitive industry and Uber's AV position."
Uber's stock price reaction to Tesla's Robotaxi Day could depend on Tesla’s perceived moat for technology, its timeline, and the potential for a partnership between the two companies.
"AVs are poised to be a large market, with 3 trillion miles driven in the US, and autonomous driving could materially expand the market as AVs will eliminate many existing market limitations."
The analysts added that Uber could have a market revenue opportunity of $480 billion.
“This huge revenue opportunity, which we think can create trillions of market value, is spurring significant investment in AV technology by some of the largest companies in the world.”
The analysts name Alphabet Inc GOOGGOOGL, Amazon.com Inc AMZN and General Motors Company GM as key investors in the autonomous vehicle sector.
Uber's valuation could increase with competition from Tesla and others, the analysts added.
The Uber Bear Case: While analysts maintain a Buy rating on Uber, they acknowledge potential concerns from investors who believe that Tesla’s Robotaxi Day and similar events could present a bearish case for the stock.
According to the analysts, points from bears include Tesla's potential pole position in autonomous vehicles, its large existing base of FSD-capable cars, a low-cost CyberCab, and its technology and AI capabilities.
"Underlying Tesla's infrastructure are the millions of cars in its network collecting real-world driving data," the analysts said.
The analysts said other automotive companies could be years behind in infrastructure, data, and vehicle launches.
Tesla could also undercut ride pricing from Uber and other companies, the analysts added.
While there were rumors of Tesla partnering with Uber or working with a company founder, Tesla CEO Elon Musk has shut down the reports. The analysts said there are no indications that the companies will work together.
"AI could accelerate Tesla's FSD capabilities & rollout."
Robotaxi Day Anticipation Builds: Thursday's Robotaxi Day is set to be a big moment for Tesla and Musk, Wedbush analyst Daniel Ives said.
The analyst, who has an Outperform rating and $300 price target, said the event could prove that Tesla is the "most undervalued AI name" and could show off "game-changing" technology.
"We believe Robotaxi Day will be a seminal and historical day for Musk and Tesla and marks a new chapter of growth around autonomous, FSD, and AI future at Tesla," Ives said.
Ives expects to hear "many updates" from Tesla at the event, including the timeline of robotaxis rolling out.
"We also expect some key updates around the company's projections on Cybercab scaling, overall cost per mile, a Tesla ride-share app, and a Generation 1 demo on premises of the breakthrough technology designed to revolutionize urban transportation."
Ives said AI and FSD could represent a $1 trillion value for Tesla in the coming years.
"Tomorrow it's time for Musk to have a watershed unveiling event to kick this AI era off at Tesla."
UBER, TSLA Price Action: Uber stock was up 2.2% to $77.87 on Wednesday, versus a 52-week trading range of $40.09 to $82.14. It is up 33.0% year-to-date in 2024.
Tesla stock was down 1.41% to $241.05 on Wednesday, compared to its 52-week trading range of $138.80 to $271.00. It is down 1.8% year-to-date in 2024.
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