Will The Stock Price of Tesla Get Cut In Half If The Company Is An Also Ran In The Robotaxi Business?

According to Cathie Wood, the price of Tesla stock will hit $2,600 per share in 2026. It's currently a little over $700 per share. “Tesla’s prospective robotaxi business line is a key driver, contributing 60% of expected value and more than half of expected Ebitda in 2026,” wrote ARK analyst Tasha Keeney in a  post on ARK’s website.

However, given the current state of the robotaxi business, assuming that Tesla will be a leading player by 2026 seems like an optimistic viewpoint. Waymo and Cruise both have a huge lead in developing a robotaxis. 

General Motors-backed Cruise received approval from California regulators last week to operate a commercial robotaxi service in San Francisco, marking a watershed moment in the autonomous vehicle rollout.

Alphabet's Waymo has been running a robotaxi service in suburban neighborhoods outside Phoenix for a year and a half. It is also pursuing a robotaxi license in San Francisco.

Tesla's robotaxi venture may or may not be vaporware. During the Q1 2022 earnings call, Elon Musk talked  about the timeline for Tesla's Robotaxi. Tesla plans to announce the vehicle in 2023 and begin mass production in 2024. But given Tesla's track record of missing Musk's target dates, it would not be surprising if this launch projection turns out to be optimistic. And given the huge lead Cruise and Waymo hold, there is certainly no guarantee that Tesla's robotaxi's service will be nationally competitive with these well funded competitors. Building out a national or international robotaxi is likely a multi year project. 

The announcement today that Uber is teaming up with Wayno on autonomous tracking may be another challenge for Tesla. In addition to Cruise and Waymo (and Zoox), Tesla will be competing against Uber and Lyft and possible combinations among these 5 firms.

Tesla currently sports a very rich P/E of 97. Given the challenges the company faces in launching a robotaxi business, it may be more likely that the 2026 stock price is $350 rather that $2,600.

Full discloure - I am short Tesla bearish call spreads and short SARK puts (the inverse ARKK ETF). Thus, I profit if the price of Tesla and ARKK stays flat or declines.