Tesla is set to make significant announcements on Thursday, coinciding with a challenging period for stocks as the earnings season begins.
Elon Musk, the CEO of Tesla (TSLA), is a highly influential figure in the tech world, known for his dynamic leadership across various successful ventures, including SpaceX and Tesla’s electric vehicles.
This week, all eyes will be on Musk and Tesla as they prepare to unveil plans for their new Robotaxi at Warner Bros. Studios in Los Angeles. This event holds particular significance for both Musk and Tesla, especially following a period of challenges for the company. Between late 2023 and April 2024, Tesla’s shares fell 44% due to concerns about stagnating sales. However, since April, shares have rebounded, climbing 76% and showing a slight gain of 0.64% year-to-date.
The Tesla Robotaxi event is part of a busy week filled with corporate announcements, investor meetings, and economic reports, marking the unofficial start of the third-quarter earnings season.
Stocks wrapped up the previous week with modest gains, bolstered by a positive jobs report from the Labor Department. The S&P 500 saw a 0.2% increase, while the Nasdaq Composite and Dow Jones Industrial Average both recorded gains of 0.1%. A particularly strong finish on Friday saw the Dow rise by 341 points to close at a record 42,352.75.
Despite these gains, three main issues have weighed on investor sentiment:
- Escalating tensions in the Middle East, raising concerns about potential conflict.
- An unexpected increase in interest rates following the Federal Reserve’s decision to cut rates by half a percentage point on September 18.
- Growing national tensions as the presidential election approaches.
Despite these challenges, the S&P 500 is up 20.6% for the year, with the Nasdaq gaining 20.8% and the Dow up 12.4%.
While Tesla shares have seen a remarkable recovery since April, including a 22% rise in September, they ended last week down approximately 4%. September’s gains suggested a resurgence of confidence ahead of the Robotaxi presentation. Musk has been promoting the Robotaxi concept for months, asserting that it could revolutionize urban transportation.
The success of this event is crucial for Musk, who aims to position Tesla as more than just a car manufacturer but as a leader in artificial intelligence and autonomous driving. Many analysts, however, remain skeptical, viewing Tesla primarily as a car company. The Robotaxi initiative, along with Tesla’s broader vision of creating a vast data network from its vehicles, aims to improve route efficiency for drivers.
A key risk for Musk this week is the potential inability to persuade stakeholders—customers, fans, and investors—of the Robotaxi’s viability, especially in light of existing autonomous taxi services like Waymo, which has successfully operated in cities like San Francisco.
Several details regarding the Robotaxi remain uncertain:
- When will a production model be available?
- Who will operate the Robotaxis—Uber, individual vehicle owners, or Tesla itself?
- What will the rollout plan look like?
It’s important to note that Tesla is not the first to venture into the robotaxi market. Waymo, a subsidiary of Alphabet (GOOGL), has been providing autonomous taxi services in various cities, although not without issues, including incidents involving its vehicles.
In addition to Tesla, semiconductor company Advanced Micro Devices (AMD) will also be hosting a significant event to highlight its AI products. AMD shares have increased about 16% in 2024 as the company competes for recognition in the tech sector.
As the third-quarter earnings season kicks off, major companies will be reporting their financial results, including PepsiCo on Tuesday, followed by Delta Air Lines, Infosys, and Domino’s Pizza on Thursday. A notable highlight will be Friday when several major financial institutions, including JPMorgan Chase, Wells Fargo, and BlackRock, will announce their earnings.
The upcoming week will also feature critical economic data releases, including the Consumer Price Index (CPI) and Producer Price Index (PPI), which are expected to provide insights into inflation and economic conditions. The consensus estimates suggest modest inflation growth, likely keeping the Federal Reserve satisfied.
The Street, Quartz, and Investor’s Business Daily contributed to this report.
