MARKET RECAP
⭐️ The S&P Hits All-Time Highs As Tariff Fears Ease

☀️ It was a great week in the markets with the indexes flying high!

• The S&P 500 is up +3.4%

• The Nasdaq-100 is up +4.2%

• Bitcoin is up +0.9%

🚀 With this week’s rally, the S&P 500 is now back to all-time highs, rising over +23% since the tariff crash in April.

🙏 The theme this week was increasing optimism across 3 main factors:

• 🏦 Interest Rates: Investors are increasingly optimistic that the Fed will cut interest rates, pricing in a 93% chance that the Fed will lower rates by the end of September, up from 70% just a week ago.

• ❌ Tariffs: Tariff worries have eased significantly as Trump relaxes some of his harsher tariffs.

• 🇮🇷🕊️🇮🇱 Middle East: Fears of conflict in the Middle East have settled slightly after Trump’s announcement of a ceasefire between Israel and Iran.

😰 But despite the market flying high this week, one popular stock fell flat: Tesla ($TSLA), falling -1.2% and now down -10% over the past month.

🚗 While that might not seem too significant, this was the week Tesla unveiled its long-awaited Robotaxi in Texas so many expected it to be a big week for the stock.

🔮 As Elon has said many times, ‘the future of Tesla is fundamentally based on large-scale autonomous cars’ and some analysts believe robotaxis account for 60% of Tesla’s $1T valuation, so the success of Tesla’s robotaxi is absolutely critical for the company.

🔍 So let’s take a look at what’s going on, why the stock is falling, how investors are reacting, and what all this means for Tesla moving forward…

TOP STORY
📉 Tesla Stock Falls Despite Long-Awaited Robo-Taxi Rollout

🚗 After years of hype, expectations, and promises, the robotaxi finally hit the roads last Sunday, with Tesla launching a limited version of the robotaxis in Austin, Texas.

👏 Like an Uber (or a Waymo), customers hail the taxi with an app and pay a flat rate of $4.20. Many of the early customers (who were mostly pro-Tesla social media influencers) took to X to applaud the rollout.

🏆 On Monday (the day after the launch) Tesla stock rose +10% as Musk celebrated the roll-out as a triumph.

😰 But over the week, cracks began to show as videos of the self-driving cars breaking traffic laws and other mishaps raised concerns, driving the stock down from Tuesday to Friday.

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TOP STORY CONT.
😰 Videos of Robotaxis Entering Wrong Lanes, Driving Over Curbs, and More Raise Concerns

⛵️ The Robotaxi roll-out hasn’t been all smooth sailing. Videos of the taxi’s driving into oncoming lanes, speeding, slamming on brakes, and more have been documented in a viral Reddit thread and countless major news outlets have been covering the midhaps.

Some analysts say this is to be expected for an early rollout, but others say that it highlights that Tesla still has a long way to go before widespread adoption.

If Tesla was the first mover, even these mishaps could likely be shrugged off as the growing pains of the revolutionary technology, but unfortunately for Tesla - that’s not the case…

🚘 Waymo is Years Ahead

Waymo, which has been offering driverless rides since March 2022, is years ahead of Tesla - already servicing more than 250,000 paid trips a week in San Fransisco, LA, Pheonix, and Austin with plans to roll out soon in DC, Miami, and Atlanta.

🤔 So why is Tesla so far behind?

Well, unlike Tesla, which relies on AI and cameras, Waymo uses LIDAR, which uses laser pulses to create a 3D map around the vehicle. Elon has been adamant that ‘Lidar is lame’, saying it’s expensive and unnecessary.

Elon is right that LIDAR is expensive, costing $12,000 per vehicle compared to only $400 for cameras, but whether it’s ‘unnecessary’ is a huge source of debate. Some say that Elon’s decision to ditch LIDAR will ‘prove to be a big mistake’ but Elon and Tesla are adamant that not relying on LIDAR will prove to be a competitive advantage:

👀 Investor Reactions

Overall, Investors had a pretty mixed reaction to the rollout. Some, like long-time Tesla optimist Dan Ives called the launch ‘revolutionary’ and ‘the start of a golden era of autonomous’ but others called out a more fundamental worry:

The challenge many investors are pointing to is that, with Tesla stock worth over $1T (more than the next 20 automakers combined), the success of the Robotaxi may already be priced into the stock.

While some, like ARK Invest’s Cathie Wood, project that the robotaxi business could generate $951B in revenue for Tesla by 2029 (nearly 10x Tesla’s total revenue), many disagree, questioning whether the robotaxi business (especially with competitors like Waymo) is as large as Tesla and its supporters project.

Even long-time Tesla investors question the projections, with some citing this valuation disconnect as the reason for selling the stock:

💡 My Thoughts

🧐 As for me, I tend to agree with the skeptics. Uber is only a $200B company (worth 1/5th of Tesla), so I don’t see how dominating the ride-sharing space with Robotaxis would drive the revenue Tesla (or Cathie Wood) is projecting.

📉 Also, with Tesla’s declining/stagnating auto business, much of the success from robotaxis already seems to be priced into the stock, so Tesla needs to not only deliver but overdeliver on the already high expectations.

🌼 I realize this may not be the most popular opinion, with Tesla ranking as the #9th Most Held stock on Blossom with over 14,000 holders (if we include the 2,700 of you who hold Purpose’s Tesla Yield Share ETF) - so please let me know what I’m missing by leaving a comment on my Blossom post here!

😎 In any case, this is just the beginning of the Tesla Robotaxi journey, so I look forward to keeping you updated as the story develops!

ALSO IN THE NEWS
🗞️ Other Key Headlines this Week

😎 Normally, I go into a bit more detail for each story here, but since the Tesla story was so long, I’m going to keep this section more brief with links to the full story if you’re interested!

• 👟 Nike ($NKE) soared +20% this week after Q4 earnings show that turnaround plan is working, posting smaller-than-expected drops in revenue and profit (see full story).

• 🤖 Nvidia ($NVDA) jumped +11% this week to record highs after Nvidia’s held it’s annual shareholder meeting on Wednesday where CEO Huang called robotics (currently 1% of Nvidia’s revenue) Nvidia’s ‘biggest opportunity’ (read full story).

• 🪙 Circle fell -24% this week, and Coinbase jumped +17% in line with my predictions last week that the valuation disconnect was unsustainable (see full story).

• 🚀 Rocket Lab ($RKLB) jumps 22% after securing two launch contracts wth the European Space Agency, and NATO boosts its spending target (see full story).

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

👇 Click to see the full post!