The markets have been roaring as of late. Both the Nasdaq Composite and S&P 500 indexes are trading near all-time highs as investor optimism continues to soar.
One stock that has enjoyed some new life is Tesla (TSLA 3.47%). From Jan. 1 to June 30, Tesla stock posted a decline of 20%. However, from July 1 through July 10, shares of Tesla soared by 25%.
This is a pretty dramatic swing in an otherwise short time frame. So, what could be the driving force behind the resurgence of Tesla stock?
Well, in addition to the company reporting second-quarter earnings later this month, investors were set to get a preview of the long-awaited robotaxi on Aug. 8.
However, on July 11 Bloomberg reported that the robotaxi event is now delayed until October. Unsurprisingly, shares of Tesla initially traded down on the news.
But on Friday July 12, Tesla shares started to rebound. Coincidentally, on the same day, the company's CEO, Elon Musk, posted on X (formerly Twitter) alluding to his mistrust of breaking news stories.
While he didn't outright deny a delay to the robotaxi event, the timing of Musk's social media activity is curious, to say the least.
Let's dig into the robotaxi, assess what it could mean for the future of Tesla regardless of a delayed unveiling, and explore if now is a good time to get in on the action.
NASDAQ: TSLA
Key Data Points
1. What is Tesla's robotaxi?
One of the biggest projects at Tesla is the development of autonomous driving software. Musk believes that full self-driving (FSD) is going to be a game changer for the company and the automobile industry at large.
In fact, during the company's first-quarter earnings call earlier this year, Musk proclaimed that "all cars will need to be smart cars, or you will not sell, or the car will not -- nobody would buy it."
He made this prediction while comparing cars to cellphones -- drawing a parallel to the rise of smartphones over the last decade.
While FSD may persuade a new cohort of buyers to purchase a Tesla vehicle, the bigger opportunity lies with robotaxis.
Robotaxis are the core pillar of Tesla's vision as it relates to autonomous driving. Musk wants to build a fleet of Tesla vehicles that can be hailed on demand and are capable of driving themselves.
Although this is incredibly ambitious, the upside could be lucrative. A fleet of self-driving vehicles could dramatically disrupt services including ride-hailing applications, delivery services, and rental car businesses.
Even skeptics are intrigued by Musk's robotaxi project. And finally, after years of Musk teasing the initiative, investors may finally get a glimpse -- at least that's what we were told.
Image source: Getty Images.
2. What was supposed to happen on Aug. 8?
During Tesla's first-quarter earnings call, Musk told investors that Tesla would be "showcasing our purpose-built robotaxi or cybercab in August."
Moreover, just a couple of months after Musk's robotaxi statement, longtime Tesla bull Cathie Wood upgraded her price target on the stock. The main catalyst behind Wood's upgrade? Robotaxi.
Wood has spoken about robotaxis at length, and recently said that she believes this technology could be a $10 trillion opportunity at global scale.
Although all of this is exciting, the music came to an unsettling silence on July 11 as media outlets reported that the August Tesla robotaxi event was now delayed by three months.
Then Musk posted this on X.
The legacy media is a propaganda machine https://t.co/nCHlI5sI9j
— Elon Musk (@elonmusk) July 12, 2024
3. This isn't Musk's first rodeo
Given the surge in Tesla stock in early July, I can't help but think that some momentum traders had entered a position in anticipation of the robotaxi event.
By doing just a simple sweep across social media platforms, I've found a lot of different theories as to what the August event was going to detail. Some believed that Musk would surprise investors by revealing a new Tesla model, while others thought that he might do a live demo of a robotaxi and show off the technology.
While these are interesting ideas, the reality is that no one actually knew what was going to happen. And now we don't really know when, either.
The way I see it, even if Musk did flirt with a live presentation of robotaxi, keep in mind that his demos have not always gone according to script.
My take was that buying Tesla stock at this moment so close to the scheduled robotaxi event carried too much risk. Although I am a Tesla shareholder and have long been a supporter of the company, I don't encourage following momentum.
Of course, long-term investors don't need to worry as much about what specific price they buy a stock at. However, the situation with Tesla at the moment is a little different. The stock has been on a tear for no real reason -- at least, no reason that's specifically tied to the business performance.
Right now, I think the hype and speculation surrounding the robotaxi event ignited some fleeting buying activity in Tesla stock. However, if the event had not gone according to plan or left investors uninspired, a sharp drop in Tesla stock could very much have ensued.
In fact, that's essentially what is happening right now given the alleged timeline change. Furthermore, as I've expressed previously, Musk has a history of missing deadlines. I see this robotaxi hoopla as no different.
I think the most prudent approach is to dial into the earnings call on July 23 and listen carefully to see if Musk drops anymore hints about robotaxis. Personally, I think being overly transparent in a situation like this is the least he could do. Moreover, I find his recent social media posts equal parts eccentric and mysterious. In either case, as a shareholder I feel a bit left in the dark right now.
Hopefully some concrete details will be revealed one way or another and provide investors with some assurance as whether or not the event is delayed and what can be reasonably expected.
Until then, I would sit on the sidelines and look to scoop up shares once this outsize volatility has dissipated.
