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When You’re here (NASDAQ:TSLA) founder and CEO Elon Musk announced the date of August 8 for his robotaxi event, the stock managed to rise amid its multi-year downturn. Although stocks have since reversed course again, everyone will be tuning in when Musk takes the stage this summer. The company’s potential innovations could well help Tesla regain its magnificence.
There’s no doubt that the burgeoning robo-taxi market has seen setbacks over the past year. With General engines (NYSE:General manager) abandoning its Cruise robotaxi service after an incident, it seems that overly ambitious investors underestimated the difficulty of putting the finishing touches on fully autonomous driving. Although Cruise has since rebooted in the state of Arizona, only time will tell if robo-taxis are finally ready for prime time.
Either way, the following robotaxis games seem pretty cheap given the relatively muted expectations for robotaxis and autonomous vehicles as a whole.
Tesla (TSLA)
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Many people doubted Musk’s ability to lead the electric vehicle (VE) heavyweight towards profitable growth. And even though Tesla’s margins are poised to take a hit as auto sector headwinds persist in the near term, the robotaxi opportunity could cause TSLA to prove seriously undervalued. But this must deliver on August 8.
As things stand, it doesn’t appear that most investors are willing to bet on the big day to turn Tesla’s fortunes around.
Indeed, betting against Musk’s Tesla could have paid off over the past two years. But long-term shorting can be dangerously risky as Tesla seeks to show where it stands in the robo-taxi race. Either way, I expect TSLA stock to be extremely volatile as we head into August.
The robo-taxi revolution, according to Musk, may very well be underway and it may not include LIDAR. Even if it doesn’t, I still view Tesla as a top robotaxi contender that will be ready to make a splash, whether it’s this year or several years from now.
Baidu (BIDU)
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Chinese tech giant Baidu (NASDAQ:BIDU) could give Tesla and other autonomous vehicle champions good value for money. With expertise in AI and a license to operate its robotaxi services in Wuhan and Chongqing, Baidu could gain the upper hand over its American counterparts.
Nonetheless, Baidu still has a way to go as it seeks permits to become fully autonomous in major Chinese locations. Additionally, it’s unclear how Chinese regulators will go about giving the green light to robot taxi companies. Will it get easier or harder as technology innovators seek to safely manage these hard-to-predict cases?
Either way, Baidu is an intriguing play for investors with the courage to bet on a Chinese internet titan. At the time of writing, the stock is trading at 13.4 times price-to-earnings after losing more than 65% of its value since its short-lived 2021 peak.
Uber (UBER)
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Uber (NASDAQ:UBER) has been incredibly hot, melting nearly 140% over the past year. With improving fundamentals and sustained growth, derailment of this transportation titan is unlikely. Although the stock has become more expensive during its recent climb, I see the company as a potential beneficiary of the rise of robotaxi services, regardless of which company comes first.
Sure, Uber may have abandoned its self-driving unit in the latter half of 2020. However, that doesn’t mean the company can’t take a cue from another company in introducing self-driving vehicles to on board its carpooling platform.
Either way, I think Uber already has a robotaxi dance partner in mind. It would be Waymo to Alphabet (NASDAQ:GOOGLE) (NASDAQ:GOOG). Even though the company has taken a backseat when it comes to autonomous driving innovation, it still has a lot to offer. Most notably, it has impressive algorithms and a wealth of user data.
If robotaxis took to the road en masse, I wouldn’t count UBER stock out of the game. In fact, I’d say advances in self-driving technologies could improve the situation even further.
As of publication, Joey Frenette owned shares of Alphabet (Class C). The opinions expressed in this article are those of the author, subject to InvestorPlace.com’s publishing guidelines.
