TESLA EXTENDS ITS GAIN AFTER ELON MUSK SAYS ROBOTAXI FLEET COULD MAKE NON-AUTONOMOUS CARS OBSOLETE

Tesla (NASDAQ:TSLA) shot up in postmarket trading, despite posting a sharp drop in Q1 revenue, deliveries, margins, and EPS from a year ago. Investors seem to be latching on to the company's commitment to launch a more affordable model that can be produced on the same manufacturing lines that are currently utilized for the company's current model lineup.

During the earnings conference call, CEO Elon Musk said the EV adoption rate globally is under pressure, but he still thinks EVs will dominate the automobile industry over the long term. He also said that new models will be launched in the early part of 2025 or potentially late in 2024 using aspects of its autonomous technology. The new models will be built on existing production lines. Musk was not willing to say if the new models would be reiterations of existing models.

Musk also talked up the upside of the latest FSD release. He said a neural network with cameras is the right solution for FSD. He also said Tesla's (TSLA) AI computing power is making rapid progress. Musk said Tesla (TSLA) is in talks with at least one major automaker about licensing FSD.

In regard to a question on Optimus, Musk said he expects the company will be able to begin selling the humanoid robots by the end of next year. He still thinks Optimus could be Tesla's (TSLA) largest business of all.

Musk said it is helpful that other automakers are forging a way with regulatory approvals on autonomous driving. He also leaned on data showing autonomous driving is safer than human driving. He envisions a robotaxi fleet that is a combination of Uber Technologies (UBER) and Airbnb (ABNB), with customers and the Austin-based company both controlling parts of the fleet. "In the future, gasoline cars that are not autonomous will be like riding a horse and using a flip phone, and that will become very obvious," stated Musk.

Analyst reactions

On Seeking Alpha, Investing Group Leader Ahan Vashi noted that Tesla (TSLA) swung to negative free cash flow in Q1. "While Tesla has a $26B cash cushion, the situation could get dicey pretty quickly in the event of a hard landing in the economy," he warned. Vashi observed that Tesla (TSLA) is coming out with a cheaper vehicle in the second half of 2025 to bridge the gap between growth waves, but thinks the "half-house measure" doesn't alleviate demand worries. He expects the selling pressure on TSLA shares could come back in the next few sessions.

Seeking Alpha analyst Christopher Robb said the Tesla (TSLA) report seems like a "kitchen sink" reaction after brutal price action, and due to the massive restructuring the company is undergoing. "The initial reaction seems to show that relief over the low-cost model trumped concerns about a greater-than-expected drop in revenue and increasing competition," he added.

CFRA has a more bullish stance on Tesla (TSLA). Following the report, analyst Garrett Nelson said he thinks the release will go a long way toward helping restore investor confidence in the overall story and justify its valuation premium as a cutting-edge tech company, not merely an auto manufacturer.

Shares of Tesla (TSLA) were up 10.38% in postmarket trading to $159.68. The rally places shares back to where they stood about a week ago. Rivian Automotive (RIVN) and Li Auto (LI) are the two EV stocks breaking the most in the late session.

2024-04-23T22:07:06Z dg43tfdfdgfd