Elon Musk sent two tweets Friday that are giving investors heartburn given Musk’s Twitter-history with the SEC. In response to a Twitter follower who posted:
“…FSD is the biggest thing ever…Tesla is going to be bigger than Apple…” - Whole Mars Catalog, March 25, 2021
Musk responded:
“I think there is a >0% chance Tesla could be the biggest company” - Elon Musk, March 26, 2021
This response does not seem to be a big of a problem. However, there is a second Musk tweet (which has since been deleted) that is causing all of the angst:
“Probably within a few months” - Elon Musk, March 26, 2021
Both the SEC and Tesla representatives have declined to comment according to the Washington Post. However, the managing director of equity research for Wedbush Securities, Dan Ives, commented that Musk’s tweets often are frustrations for investors.
I agree with Ives!
Beyond this most recent Musk-Twitter challenge, however, many believe FSD is a key Tesla technology that will drive significant valuation for the company. For example, Cathie Wood of Ark Invest is expecting Tesla to hit $3,000 per share by 2025 (385% higher than Friday’s closing price). Many of the Tesla bulls like Wood believe that it’s this FSD capability that will drive an entirely new robotaxi business for the company worth hundreds of millions of dollars in incremental and recurring earnings.
I do own Tesla shares (but have reduced my level of holdings recently). But I’m not as confident FSD will drive significant recurring business revenue as fast as many others believe. Musk clearly has plans for a robotaxi business based on the autonomous driving technology the company is developing. But there are obstacles.
Tesla will not capture 100% of the robotaxi opportunity as several other companies are racing to develop this capability and profit in this robotaxi space as well (Waymo, GM’s Cruise, and others).
Government regulations covering autonomous driving and robotaxi operations may hinder the speed of implementation.
Tesla’s approach to self-driving development could be all wrong as Waymo’s CEO (John Krafcik) and Mobileye’s CEO (Amnon Shashua) recently asserted regarding Tesla’s technology. In fact Krafcik believes Tesla FSD will never develop into full autonomous capability.
Over the years, I’ve learned not to doubt Musk’s pronouncements automatically, however. I continue to believe a robotaxi businesses will be slow to materialize (particularly the kind Musk envisions where Tesla autonomous vehicles can essentially operate anywhere). Yet, there have been very few Musk declarations over the years concerning Tesla that did not eventually materialize. Eventually! Like the EV business in general, the robotaxi business will not be a zero-sum game with Tesla winning and all others losing. And unlike EVs, Tesla may not have a first-mover advantage at all in autonomous driving, robotaxi capability.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.