It wasn’t surprising when Tesla (TSLA) shares shot up following the company’s first-quarter earnings release.
Tesla reported a 9% year-over-year decline in first-quarter revenue to $19.34 billion with earnings of 27 cents per share. Analysts were expecting revenue of $21.3 billion with earnings of 41 cents per share.
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The company’s gross margin fell to 16.3% from 17.4%, and most concerningly, its automotive revenue fell 20% year over year to $13.9 billion.
Shares are up 15% since the earnings release, despite the forgettable quarter. Numerous factors, chief among which is CEO Elon Musk’s return to lead the company full time, are contributing to this.
But also, the company hasn’t been considered a traditional car company for years.
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Suppose General Motors or Ford had reported similar numbers. In that case, it is unlikely those stocks would have reacted similarly, but Musk has said before that Tesla isn’t a normal auto manufacturer and should not be treated as such.
The analyst community, for the most part, agrees with this assessment, granting Musk’s company more leeway regarding its fundamentals.
The argument goes that Tesla’s true value has yet to be unlocked, but as the company builds out its Full-Self-Driving Technology and begins licensing this and other technology to its competitors, it will start reaching its full potential.
However, Piper Sandler sees a big problem with full-self driving ahead of a big launch for Tesla this summer.
Tesla unveiled FSD 13 nearly five months ago.
Image source: Sjoerd van der Wal/Getty Images
Tesla robotaxis aren’t ready to hit the roads, yet
The other piece of news emerging from Tesla’s earnings was that the company is on schedule to launch its robotaxi pilot program in Austin, Texas, this summer.
However, unlike the company’s presentation from last fall, the robotaxi program won’t feature a pedalless, steering wheelless coupe, and instead will just use existing technology in existing Tesla models.
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But Piper Sandler analyst Alexander Potter and his team don’t think FSD version 13 is advanced enough to handle the challenge.
Piper Sandler has an overweight rating on Tesla, and FSD is the largest contributor to the company’s long-term $400 price target, according to Tuesday’s note.
Despite its bullish outlook, the firm says that FSD version 13 cannot support truly autonomous vehicles without human control.
It came to this conclusion after a recent call with Elias Martinez, the creator of the FSD Community Tracker, which monitors FSD’s progress.
Tesla hasn’t had a public update to version 13 since it debuted nearly five months ago. Piper Sandler speculates that the company has been focusing on making the Austin launch a success during that time.
Piper Sandler reverses course on Tesla, again
Two weeks ago, Piper Sandler reaffirmed its overweight rating and $400 price target based on Tesla’s commitment to launching its robotaxi program in the coming weeks.
The firm said Tesla’s push forward with robotaxi was “the most important Q1 takeaway.” However, the firm now believes Tesla’s technology can’t handle the task and still retains its bullish outlook.
Tesla has promised that its robotaxi program will allow users to earn passive income by having Teslas run autonomously as taxis.
Musk reiterated that promise during Tuesday’s call, but he also provided some bad news for people who were looking forward to the Cybercab.
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“We should parse out the terms for robotic taxi or robo taxi. We’ve got a product called a Cybercab, and then any Tesla, which could be an S, 3, X, or Y — that is autonomous, is a robotic taxi or robo taxi,” Musk said before immediately adding that the whole thing was “very confusing.”
But the bottom line seems to be that if you own a Tesla with FSD capabilities, your vehicle could potentially be a robotaxi, starting in June in Austin.
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