Tesla Stock Gets Wall Street Upgrade on Robotaxi Potential
Key Points
Wall Street is divided on Tesla's future, especially regarding robotaxi potential.
Robotaxi revenue is expected to ramp up significantly by 2030.
Investors should monitor full self-driving progress and not rely solely on analyst upgrades.
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Tesla (NASDAQ: TSLA) is a stock that divides Wall Street analysts, with Piper Sandler, Canaccord Genuity, and Wedbush in the bullish camp currently, with respective price targets of $500, $450, and $600; while UBS and Barclays take a more skeptical view with their respective $364 and $360 targets. The stock closed Tuesday at $434.
It remains to be seen which camp is right, but we do know that in the near term, the robotaxi rollout will determine the stock's fate. Here's what to expect.
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Establishing a robotaxi business
Canaccord analyst George Gianarikis recently raised his price target on the stock, partly because the company is derisking its supply chain with large-scale investments in semiconductors, lithium refineries, battery production, and other factory investments.
It's a powerful case that emphasizes the long-term potential of the businesses that CEO Elon Musk is putting together, with the earliest major catalyst coming from Cybercab. It's not so much the immediate profitability of Cybercab that will move the needle, but rather the establishment of a core robotaxi business that should scale dramatically in the coming years.
What Wall Street expects
These assumptions are baked into Wall Street's forecasts. While the numbers reflect a wide range of outcomes, it's clear that robotaxi revenue won't be material in 2026, as Musk stated on the recent earnings call. He did say it would "be material probably in a significant way next year," and the consensus calls for 1.6% of revenue from the robotaxi business next year.
|
Wall Street Estimates for Cybercab/Robotaxi Revenue |
2026 |
2027 |
2028 |
2029 |
2030 |
|---|---|---|---|---|---|
|
Consensus |
$183 million |
$1,843 million |
$6,998 million |
$22,276 million |
$42,436 million |
|
Median |
$87 million |
$1,205 million |
$2,285 million |
$25,748 million |
$34,776 million |
|
Excluding minimum and maximum estimates |
$101 million |
$1,302 million |
$5,419 million |
$22,966 million |
$40,707 million |
|
Total company revenue |
$102,760 million |
$117,248 million |
$141,106 million |
$177,346 million |
$215,037 million |
Data source: S&P Global Market Intelligence Visible Alpha.
Whichever way you look at it, Wall Street is baking in a substantive ramp-up in robotaxi revenue in the coming years, such that it could contribute 20% of revenue in 2030 and about 30% of gross profit. More importantly, forecasts expect robotaxis to account for a major share of Tesla's marginal revenue growth over the next few years.
What it means to investors
Musk recently told investors he expected the robotaxi service to be widespread by the end of the year. As exciting as that prospect is, investors need to be patient, because "widespread" doesn't necessarily mean a huge number of vehicles in each location. Nor does it mean a lack of geofencing.
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Those things are likely to come when, as Musk outlined on the earnings call, full self-driving v15 software is validated and released "before going to large-scale unsupervised FSD."
Of course, investors shouldn't slavishly follow analyst upgrades, as useful as they are, but instead focus on anticipating and monitoring the gradual rollout of robotaxis and, ultimately, the development of v15 FSD. The company has an exciting future, but the big ramp-up in robotaxi deployment and revenue isn't likely until next year.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
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