Is Tesla’s robotaxi a long-term threat to Uber’s business model? Wedbush Securities weighs in

Uber’s stock dropped on May 29 after a report from Wedbush Securities that highlighted the potential impact of Tesla’s upcoming robotaxi on the ride-hailing giant’s business model, as per a report.

Wedbush Sees Uber’s Long-Term Competitive Threat

Wedbush, with a neutral rating and an $85 price target on Uber, views Tesla’s robotaxi as an eventual competitive threat, according to The Street. The company pointed out that while Uber’s management has performed well in mobility and delivery, the stock is trading at a premium to peers and might have limited upside if demand declines, as per the report.

Elon Musk Gives a Robotaxi Update

This came after Tesla CEO Elon Musk wrote an update on the project’s status in a May 29 post on social media X (previously Twitter), “For the past several days, Tesla has been testing self-driving Model Y cars (no one in driver’s seat) on Austin public streets with no incidents,” adding, “A month ahead of schedule. Next month, first self-delivery from factory to customer,” quoted The Street.ALSO READ: Donald Trump’s next targets for immigration crackdowns revealed—here’s the list

BMO Capital: Uber’s Drop Was Expected

While, BMO Capital maintained an outperform rating on “Top Pick” Uber, with a price target of $101, it revealed that Uber’s underperformance after the announced robotaxi launch date was expected, according to the report.

According to BMO Capital report, “Uber’s shares are oversold at current levels, given Uber continues to expand internationally with the purchase of Denmark’s largest taxi company, Dantaxi; continued positive trends for AV adoption in Austin; and ongoing innovation for both Mobility and Eats,” reported The Street.

Uber’s Autonomous Future is Already in Motion

However, Uber has expanded its partnership with Alphabet’s Waymo to include Austin and Atlanta for its autonomous vehicle, and it has been offering rides through Waymo in Phoenix since 2023, as per the report. While, Uber also has a partnership with Chinese autonomous vehicle company WeRide and it recently said that Uber would reach 15 cities in the next five years, including some in Europe as well as the United States, reported The Street.

FAQs

Why did Uber’s stock fall?
Investors were reacting to concerns that Tesla’s robotaxi could threaten Uber’s business in the future, as per The Street.

Who raised the alarm about Tesla’s impact on Uber?
Wedbush Securities published a report saying Tesla could become a long-term competitor in the ride-hailing space, as per the report.