It’s another week, and if there is any event more anticipated than the U.S. Presidential Election on November 5, then it would be Tesla’s “Robotaxi Event” on October 10.
While bears and bulls preview the event from opposite sides, Ford gets a boost from Goldman Sachs, a key Tesla rival reports a new capital injection, and analysts are mulling Stellantis.
Elon Musk's Hollywood Party.
On Oct. 10, Tesla CEO Elon Musk (TSLA) is expected to lead a Hollywood-style spectacle, the highly anticipated "robotaxi event" at the Warner Brothers studio backlot.
The event itself, initially intended for August 8, is touted by Musk as "one for the history books," as it is intended to be a major product announcement for some of Tesla's more ambitious projects, such as the "Cybercab" robotaxi and a possible $25,000 electric car.
However, both Tesla skeptics and Tesla enablers are looking forward to the live-streamed event with much anticipation.
In his latest note, published on October 4, Wedbush's Tesla bull Daniel Ives relayed stellar confidence in the company's performance at the anticipated Robotaxi event.
"We believe Robotaxi Day will be a seminal and historical day for Musk and Tesla and marks a new chapter of growth around autonomous, FSD, and AI future at Tesla," Ives said in his note. "We continue to believe Tesla is the most undervalued AI name in the market and we expect Musk & Co. to unveil some 'game changing' autonomous technology at this event next week."
He reiterated his belief that Tesla is more than "just an EV vendor" and that its push into AI and robotics will be a key turning point in the future.
"We continue to believe AI/FSD represents a $1 trillion of value alone for Tesla over the coming years," he said. "Next week, it's time for Musk to have a watershed unveiling event to kick this AI era off at Tesla."
Wedbush maintained an "Outperform" rating and $300 price target for Tesla stock.
On the flip side, Deepwater Management partner Gene Munster warned, during a recent appearance on CNBC's 'Fast Money,' that the event may be "light on details," despite the built-up anticipation of Tesla revealing not one but three EVs: the "Cybercab" robotaxi, a so-called "Robovan," and possibly a $25,000 EV.
He also warned that the kind of event that Musk and Co. intend to pull off on October 10 might enable it to be light on details for its future product.
"...The setup of the event, the people that will be there; this is not analysts and investors with their laptops," Munster said. "This is essentially a launch party, so you can imagine Elon getting up there, talking in a very high level and not giving much substance around details."
Given the possibility that a potential Tesla robotaxi may end up spending an eternity in regulatory purgatory before it picks up its first passengers, Munster says he is looking for much more details about a product that has been rumored to be scrapped.
"The one detail that I’m going to hyper-focused on is that cheaper $25,000 car, when they expect to ramp production," he told CNBC.
In a note published on September 30, Morgan Stanley analyst Adam Jonas alluded to a possible radical shift for Tesla that may see itself surface very soon.
“Is it just me, or are you seeing more ‘breadcrumbs’ from Tesla’s CEO that could potentially connect Tesla with aviation? Tesla sits at the intersection of robotics and AI. Cars (81% of TSLA revenue…and falling) are just one expression,” Jonas wrote.
The MS analyst shared a few snippets where Musk expressed interest in other types of Tesla-branded transport.
He specifically pointed to Elon's comments during Tesla's second-quarter earnings call, where he mentioned that "the world is headed for fully electrified transport, not just cars but also aircraft and boats."
Going Nuts for Nio
On September 30, Bloomberg reported that key Tesla rival, the Chinese automaker Nio (NIO) has gotten a significant lifeline in the form of an investment injection of more than $1.9 billion from its shareholders.
In a statement on September 29, Nio announced that a group of key investors, including Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co., and CS Capital Co have agreed to inject about $470 billion in shares, while the rest will come from a direct investment from Nio itself.
The transactions from all parties will reduce the parent company's holding from 92.1% down to 88.3%. The 11.7% will belong to strategic investors and other stakeholders.
In a research note on Sunday, Morgan Stanley analyst Tim Hsiao said that he believes that the "new investment will resolve the company’s fundraising debate and enhance near-term cash flow"
MS maintains an Overweight rating on Nio stock and a price target of $6.10
Separately, in a research note published on September 30, Citi analyst Jeff Chung raised its price target on Nio from $7 to $8.90. It is confident that its Onvo brand will be able to boost its orders during the Golden Week holiday (a Chinese working holiday, where Chinese working people have three to four days around its National Day), where keen shoppers are expected to travel and spend money.
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Ford's Fleeting Profit Driver
Fleet sales, such as those to government agencies, businesses, and rental car companies, are often seen as a cop-out for auto manufacturers that struggle to move metal on dealership lots.
Most notoriously, Japanese manufacturer Nissan is guilty of relying on fleet sales to move Altima sedans and Rogue SUVs. According to a March 2024 Automotive News piece, February 2024 sales data showed that Nissan "sold nearly 40,000 vehicles, or 44 percent of its total volume, to fleet, mostly rental companies."
However, one company that has been trusted in fleet sales for eternity is Dearborn's very own: the Blue Oval of Ford (F) . Its Explorer-based Police Interceptor SUV is the most popular police car in the country. At the same time, its Transit van is trusted by various businesses, from plumbers, airport shuttle companies and U-Haul. If your Amazon delivery person isn't driving one of Rivian's (RIVN) purpose-built electric vans, chances are, they are driving a Ford Transit in Prime livery.
During the company’s second-quarter earnings call on July 24, Ford CEO Jim Farley boasted about its fleet business, known as Ford Pro, which was the dominant performer that quarter.
“No other company has Ford Pro. We intend to fully press that advantage,” Farley said.
In a new note, analysts from Goldman Sachs upgraded their rating of Ford stock from Neutral to Buy, citing Ford Pro as a driver of profitability. Analysts predict that Ford Pro can account for 20% of Ford's EBIT by 2026.
In its note, GS says that Ford Pro's software subscription revenue has been growing at 35-40% annually, and will "continue to grow (aided by improved offerings such as in fleet services and ADAS).”
Analysts say Ford is targeting $1 billion in software revenue by 2025. Additionally, it adds that Blue Oval's latest cost-cutting initiatives will help soften the blow from potential threats from China and short-term suppressed demand for all-electric vehicles.
GS has a price target of $13 on Ford Stock.
Related: Massive Jeep recall is only the latest headache for Stellantis
More trouble for Not-So-Stellar Stellantis.
Stellantis (STLA) is smack dab in the middle of a whole host of problems affecting its bottom line. On October 1, the multinational automaker issued a massive recall affecting its popular Jeep Wrangler and Grand Cherokee 4xe plug-in hybrids, citing a scary fire risk.
Additionally, in a statement on October 3, the automaker reported a 20% drop in vehicle sales from a year ago. Chrysler sales dropped 47%, Dodge dropped 43%, Alfa Romeo dropped 29%, and Ram truck sales dropped 19%. Jeep was one of its best performers, but it saw a 6% decline.
Matt Thompson, the head of Stellantis's U.S. retail sales, said the automaker introduced "an aggressive incentive program," or massive discounts across Stellantis's portfolio of cars at the beginning of the third quarter. This program has helped lower dealer inventories by more than 50,000 units, or 11.6%.
Following the news, Barclays analysts downgraded Stellantis stock from $25.38 to $13.79, noting that they "got wrong-footed" regarding issues in the States and Europe. The analysts add that they do not see Stellantis recovering until the first half of 2025.
On October 4, the Wall Street Journal reported that Stellantis is finding creative ways to conserve its spending. In an email read by the Journal titled “The Doghouse is back!”, Stellantis CFO Natalie Knight instructed her finance team to sharply scrutinize requests for purchases from outside vendors to rein in expenses.
“If we apply more discipline, we can ensure big savings for the company," Knight said in the email.
Related: Veteran fund manager sees world of pain coming for stocks
