When Tesla (NASDAQ:TSLA) founder and CEO Elon Musk announced a date of August 8 for its robotaxi event, the stock managed to nudge higher amid its multi-year downturn. Though shares have since reversed lower again, everybody will tune in when Musk hits the stage this summer. The company’s potential innovations may just be able to help Tesla regain its magnificence.
Undoubtedly, the nascent robotaxi market has experienced setbacks over the past year. With General Motors (NYSE:GM) pulling back on its Cruise robotaxi service after an incident, it seems that overly ambitious investors may have underestimated the difficulty of putting the finishing touches on full self-driving. Though Cruise has since restarted in the state of Arizona, only time will tell if robotaxis are finally ready for prime time.
In any case, the following robotaxi plays seem pretty cheap given the relatively muted expectations for robotaxis and self-driving vehicles as a whole.
Tesla (TSLA)
Many people doubted Musk’s ability to steer the electric vehicle (EV) juggernaut into profitable growth. And though Tesla’s margins are poised to take a hit as auto headwinds persist over the near term, the robotaxi opportunity may make TSLA prove seriously undervalued. But it must deliver on August 8.
As it stands, it doesn’t seem like most investors are willing to bet on the big day to turn Tesla’s tides around.
Indeed, betting against Musk’s Tesla may have paid off in the past two years. But a long-term short may be dangerously risky as Tesla looks to show just where it stands in the robotaxi race. In any case, I expect TSLA stock to be extremely choppy as we head closer to August.
The robotaxi revolution, as Musk sees it, may very well be underway and it may not include LIDAR. Even if it’s not, I continue to view Tesla as a top robotaxi contender that will be ready to make the splash, whether it be this year or several years from now.
Baidu (BIDU)
Chinese tech giant Baidu (NASDAQ:BIDU) could give Tesla and other autonomous vehicle top dogs a good run for their money. With AI expertise and a permit to operate its robotaxi services in Wuhan and Chongqing, Baidu may gain an upper hand over American counterparts.
Even still, Baidu has a way to go as it seeks permits to become fully autonomous in major Chinese localities. Additionally, it’s tough to tell how Chinese regulators will go about giving robotaxi firms the green light. Will it be easier or tougher as tech innovators look to safely go about handling those difficult-to-predict corner cases?
In any case, Baidu is an intriguing play for investors with the courage to bet on a Chinese internet titan. At writing, the stock trades at 13.4 times trailing price-to-earnings after having lost more than 65% of its value since its short-lived 2021 peak.
Uber (UBER)
Uber (NASDAQ:UBER) has been incredibly hot, melting up by nearly 140% over the past year. With improving fundamentals and sustained growth, derailment of this transportation titan is unlikely. Though shares have gotten pricier amid its recent ascent, I do view the firm as a potential beneficiary from the rise of robotaxi services, regardless of which company ends up first.
Sure, Uber may have given up on its self-driving unit in the back half of 2020. However, that doesn’t mean the company can’t ride on another firm’s coattails by introducing autonomous vehicles aboard its ride-hailing platform.
In any case, I believe Uber already has a robotaxi dance partner in mind. That would be Waymo of Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG). Though the firm may have taken a back seat on self-driving innovation, it still has plenty to offer. Most notably, it has impressive algorithms and trove of user data.
Should robotaxis hit the road in droves, I wouldn’t count UBER stock out of the game. In fact, I’d argue it stands to gain further from the advancement of self-driving technologies.
On the date of publication, Joey Frenette owned shares of Alphabet (Class C). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
