Robotaxi launch will be ‘X-mas morning for Tesla bears,' says Wall Street analyst

Tesla's planned robotaxi launch in Austin, tentatively set for late June, faces skepticism from Wall Street analyst Gordon Johnson, who warns of a potential bearish reaction in TSLA stock due to safety concerns related to the company's Full Self-Driving (FSD) technology. Johnson cites data suggesting frequent FSD-related crashes and argues that a premature launch could expose shortcomings and diminish hype around the technology, drawing parallels to Musk's past unfulfilled promises; despite this, TSLA shares have seen a recent uptick, potentially driven by a softening of Musk's stance towards Donald Trump, with Morgan Stanley maintaining a bullish outlook and a $410 price target.

Analysis

Tesla's impending robotaxi service launch in Austin, tentatively scheduled for late June, is under significant scrutiny from Wall Street, with analyst Gordon Johnson expressing skepticism about the readiness of the Full Self-Driving (FSD) technology and warning of a potential bearish impact on TSLA stock. Johnson's concerns are rooted in Tesla FSD Tracker data suggesting crashes every 244 to 492 miles and independent AMCI research indicating failures as frequently as every 13 miles. He posits that a public launch could expose these alleged shortcomings, potentially deflating the hype around FSD and negatively impacting valuations, drawing parallels to CEO Elon Musk's past unfulfilled promises. Johnson even suggests an indefinite delay would benefit shareholders by allowing Wall Street to maintain high valuations for what he considers a non-existent business model. Conversely, TSLA shares recently saw an uptick, opening at $334 (up 2.5%) and gaining nearly 5% over the past week, a movement potentially linked to Musk's softened stance towards Donald Trump. Adding to this mixed outlook, Morgan Stanley maintains a bullish position on Tesla with a $410 price target, suggesting the prior spat between Musk and Trump might have been a "calculated strategy." The overall sentiment surrounding this specific development, as indicated by external signals, leans moderately negative, reflecting the substantial technological and execution risks tied to the robotaxi initiative.

Key Decisions for Investors

• Investors should closely monitor upcoming announcements and independent verifications regarding the robotaxi service's safety and performance, as the late June launch date approaches, recognizing this as a pivotal catalyst for TSLA stock.
• Given the pronounced divergence between critical analyst assessments of FSD readiness and bullish institutional outlooks like Morgan Stanley's, alongside a moderately negative sentiment, prepare for heightened volatility in TSLA shares around the launch period.
• Evaluate current exposure to Tesla considering the significant risk that an underwhelming public demonstration of the robotaxi service, particularly concerning safety or reliability, could trigger a sharp negative re-rating of the stock by challenging the FSD-driven growth narrative.