RBC Capital Market analyst Tom Narayan has lowered his price target for Tesla (NASDAQ:TSLA) stock from $293 to $227 per share. Despite his lower price target, Narayan maintained his “Outperform” rating for the electric vehicle maker.
In a note, the RBC analyst stated that he was lowering his expectations for Tesla’s Robotaxi business and he was allocating a larger revenue share to potential Robotaxi service providers in the future. “We lower our TSLA robotaxi value and now allocate a bigger revenue share to Service Providers like Uber/Lyft,” Narayan stated in a note.
$TSLA bull Tom Narayan reduces his $TSLA PT on lower robotaxi estimates. Maintains Outperform rating. pic.twitter.com/G8kq9caEhN
— Gary Black (@garyblack00) June 20, 2024
RBC Capital Market analysts believe that Robotaxis will indeed come to fruition, and they will expand the total addressable market for vehicles. The advent of Robotaxis, however, would likely involve more players. Previously, RBC analyzed two Robotaxi scenarios — one with Tesla owning its entire Robotaxi operation and another with fleet operators using FSD with non-Tesla vehicles.
In his new note, Narayan hinted that Robotaxi service providers could also use either Tesla’s app or another company’s application, as noted in an Investing.com report. With this updated model, Tesla could capture 100% revenue in a fully-owned scenario, but only 10% revenue if Robotaxis end up using a service provider’s app and purpose-built non-Tesla self-driving vehicles.
The RBC Capital Market analyst also noted that he expects the mainstream usage of Robotaxis to come closer to 2040. “When robotaxis reach mainstream global usage (which we see happening closer to 2040), there will likely be multiple software providers, fleet operators, and OEMs making these purpose-built vehicles,” Narayan noted.
Despite his lower price target for Tesla, Narayan expects the Robotaxi business to account for 52% of the company’s valuation, which is lower than his previous estimate of 68%. RBC also expects FSD to contribute 27%, Megapacks to contribute 15%, and core car sales to contribute 6% to the electric vehicle maker’s valuation.
Tesla is expected to unveil its dedicated Robotaxi in an event on August 8, 2024.
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