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After years of promoting its prowess in autonomous driving, Tesla Inc. (TSLA - Free Report) is gearing up to unveil its long-awaited Robotaxi on Thursday at the “We, Robot” event at Warner Brothers Discovery studio in Burbank, CA.
The optimism over Robotaxi, which was delayed from the originally scheduled Aug. 8 launch, has boosted the Tesla stock more than 43% over the past four months. Ahead of the event, investors should take a closer look at ETFs having a substantial allocation to this luxury carmaker. These include ARK Innovation ETF (ARKK - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report) , ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) and Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) .
Musk has referred to Robotaxi as a Cybercab. The Robotaxi is expected to be a compact two-door sedan design with seating for two and ample trunk space. The vehicle will likely be built without a steering wheel or pedals and will be guided by AI-trained cameras and the company's autonomous driving software. Musk has described Robotaxi as a small autonomous vehicle (AV) that individuals can own and rent, like an Uber.
This next-generation vehicle could be key to the electric automaker’s survival, especially as competition heats up in the EV space. Tesla has been losing market share to rivals in China and the United States, resulting in a notable slowdown in growth (see: all the Alternative Energy ETFs here).
Elon Musk has not offered much details about the Robotaxis, but analysts have varied expectations surrounding the event. Let’s discuss them:
Analysts View
RBC Capital Markets analyst Tom Narayan raised the target price on Tesla by $12 to $236 per share, citing that the event would "highlight a business that represents $153 billion of revenue for Tesla," a tally that comprises around 63% of his current valuation. Narayan said that the nascent Robotaxi market could generate $1.7 trillion in global revenues by 2040 when a host of players like app providers, fleet operators and carmakers is ultimately included.
Jim Cramer described the upcoming event as “huge.” “The Robotaxi is significant because it will gain traction in many different cities. When this happens, people will realize it’s much cheaper than Uber.
ARK Invest CEO Cathie Wood painted a bullish picture for Tesla’s future in the autonomous vehicle market. In an interview with Yahoo Finance, Wood predicted that this could translate into a staggering “trillion-dollar-plus revenue opportunity for Tesla in the next five years.”
However, some other analysts believe Tesla won’t be able to live up to the hype around its Robotaxi plans. Each Robotaxi is expected to have a price target of around $150K to $200K, with some estimates suggesting Tesla would need about $35 billion to develop a global fleet of such cars.
ARK Innovation ETF is an actively managed fund that invests in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. The fund holds 34 securities in its basket, with Tesla occupying the top spot at 14.8%.
ARK Innovation ETF has gathered $5.6 billion in its asset base and charges 75 basis points (bps) in fees per year from investors. It trades in an average daily volume of 6.6 million shares (read: Tesla Returns to Delivery Growth but Shares Slip: ETFs in Focus).
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 50 securities in its basket, Tesla takes the second spot with 13.9% of the assets.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $19.7 billion and an average daily volume of around 3 million shares. It charges 9 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)
Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It employs a call option overlay to seek boosts in performance during extreme moves up in Tesla while holding a tech index for diversification and put options as a hedge.
Simplify Volt Robocar Disruption and Tech ETF charges investors 0.95% in annual fees. It has accumulated $5.5 million in its asset base while trading in an average daily volume of 2,000 shares.
ARK Autonomous Technology & Robotics ETF is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of products or services and technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials, and transportation. This approach results in a basket of 35 stocks, with Tesla occupying the top spot with a 13.6% share.
ARK Autonomous Technology & Robotics ETF has accumulated $786.6 million in its asset base and charges 75 bps in fees per year. It trades in a volume of 86,000 shares a day on average.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 277 stocks in its basket. Of these, TSLA takes the second spot with a 12.7% share. Broadline Retail, Hotels, Restaurants & Leisure, Specialty Retail, and Automobiles make up the top four sector holdings (read: ETFs to Tap on Improving Consumer Sentiment).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.8 billion in its asset base while trading in a good volume of around 74,000 shares a day on average. Fidelity MSCI Consumer Discretionary Index ETF charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.
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Tesla ETFs in Focus Ahead of "Robotaxi" Event
After years of promoting its prowess in autonomous driving, Tesla Inc. (TSLA - Free Report) is gearing up to unveil its long-awaited Robotaxi on Thursday at the “We, Robot” event at Warner Brothers Discovery studio in Burbank, CA.
The optimism over Robotaxi, which was delayed from the originally scheduled Aug. 8 launch, has boosted the Tesla stock more than 43% over the past four months. Ahead of the event, investors should take a closer look at ETFs having a substantial allocation to this luxury carmaker. These include ARK Innovation ETF (ARKK - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report) , ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) and Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) .
Musk has referred to Robotaxi as a Cybercab. The Robotaxi is expected to be a compact two-door sedan design with seating for two and ample trunk space. The vehicle will likely be built without a steering wheel or pedals and will be guided by AI-trained cameras and the company's autonomous driving software. Musk has described Robotaxi as a small autonomous vehicle (AV) that individuals can own and rent, like an Uber.
This next-generation vehicle could be key to the electric automaker’s survival, especially as competition heats up in the EV space. Tesla has been losing market share to rivals in China and the United States, resulting in a notable slowdown in growth (see: all the Alternative Energy ETFs here).
Elon Musk has not offered much details about the Robotaxis, but analysts have varied expectations surrounding the event. Let’s discuss them:
Analysts View
RBC Capital Markets analyst Tom Narayan raised the target price on Tesla by $12 to $236 per share, citing that the event would "highlight a business that represents $153 billion of revenue for Tesla," a tally that comprises around 63% of his current valuation. Narayan said that the nascent Robotaxi market could generate $1.7 trillion in global revenues by 2040 when a host of players like app providers, fleet operators and carmakers is ultimately included.
Jim Cramer described the upcoming event as “huge.” “The Robotaxi is significant because it will gain traction in many different cities. When this happens, people will realize it’s much cheaper than Uber.
ARK Invest CEO Cathie Wood painted a bullish picture for Tesla’s future in the autonomous vehicle market. In an interview with Yahoo Finance, Wood predicted that this could translate into a staggering “trillion-dollar-plus revenue opportunity for Tesla in the next five years.”
However, some other analysts believe Tesla won’t be able to live up to the hype around its Robotaxi plans. Each Robotaxi is expected to have a price target of around $150K to $200K, with some estimates suggesting Tesla would need about $35 billion to develop a global fleet of such cars.
ETFs in Focus
ARK Innovation ETF (ARKK - Free Report)
ARK Innovation ETF is an actively managed fund that invests in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. The fund holds 34 securities in its basket, with Tesla occupying the top spot at 14.8%.
ARK Innovation ETF has gathered $5.6 billion in its asset base and charges 75 basis points (bps) in fees per year from investors. It trades in an average daily volume of 6.6 million shares (read: Tesla Returns to Delivery Growth but Shares Slip: ETFs in Focus).
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 50 securities in its basket, Tesla takes the second spot with 13.9% of the assets.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $19.7 billion and an average daily volume of around 3 million shares. It charges 9 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)
Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It employs a call option overlay to seek boosts in performance during extreme moves up in Tesla while holding a tech index for diversification and put options as a hedge.
Simplify Volt Robocar Disruption and Tech ETF charges investors 0.95% in annual fees. It has accumulated $5.5 million in its asset base while trading in an average daily volume of 2,000 shares.
ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report)
ARK Autonomous Technology & Robotics ETF is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of products or services and technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials, and transportation. This approach results in a basket of 35 stocks, with Tesla occupying the top spot with a 13.6% share.
ARK Autonomous Technology & Robotics ETF has accumulated $786.6 million in its asset base and charges 75 bps in fees per year. It trades in a volume of 86,000 shares a day on average.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 277 stocks in its basket. Of these, TSLA takes the second spot with a 12.7% share. Broadline Retail, Hotels, Restaurants & Leisure, Specialty Retail, and Automobiles make up the top four sector holdings (read: ETFs to Tap on Improving Consumer Sentiment).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.8 billion in its asset base while trading in a good volume of around 74,000 shares a day on average. Fidelity MSCI Consumer Discretionary Index ETF charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.