Tesla, Inc. (TSLA) shares enjoyed a significant climb of nearly 5% on Monday, closing at the psychologically important $250 level. Much of this upward momentum was fueled by optimism surrounding the company’s expected strong third-quarter delivery figures. Amidst this stock surge, a prominent fund manager weighed in on the potential impact of the upcoming October 10th Robotaxi launch event.
Gary Black, Managing Partner of Future Fund LLC, expressed some skepticism about whether the October 10th event would act as a catalyst for the stock, even though he didn’t completely dismiss the possibility. Black’s hesitation stems from his belief that Tesla’s full self-driving technology is not yet sufficiently advanced to achieve the 99.99% efficacy required for truly unsupervised autonomy.
Most analysts have already factored in the potential of supervised FSD into their models, assuming a take rate of 15-20% for existing vehicles and new deliveries. Analysts also anticipate that a supervised FSD system with 97% efficacy would lead to increased Tesla sales.
Black, however, expressed a more optimistic outlook regarding the launch of a new compact car priced between $25,000 and $30,000. He draws parallels with the introduction of the Model Y in 2019, a time when many short-sellers were skeptical. The Model Y ultimately proved successful, expanding Tesla’s market share and propelling the company into the fast-growing CUV category.
Black believes that a sub-$30,000 car, should it be unveiled on October 10th, could provide a strong reason to buy Tesla stock. He argues that an affordable electric vehicle would allow Tesla to capitalize on its brand recognition, superior range, advanced technology, and better performance in the large compact car segment, where Toyota Motor Corp.’s Corolla currently reigns supreme.
He points out that unlike the Model 3, which competes in a different category (affordable sedans), the new compact car would likely capture incremental sales and not cannibalize existing Model 3 sales. Black believes that this could lead to a shift in the current trajectory of earnings estimates, potentially changing the overall narrative surrounding Tesla investment. He anticipates that the increased sales volumes will translate into higher earnings estimates, ultimately driving up the stock price.
Tesla’s shares ended Monday’s trading session up 4.93%, closing at $250. With this recent rally, the stock has moved into positive territory for the year, currently up 0.61%.
Black’s insights offer a valuable perspective on the potential impact of both the Robotaxi launch and the potential release of a new affordable compact car on Tesla’s stock performance. As investors await these developments, the stock’s recent surge suggests a positive outlook for Tesla’s future.
