TSLA Roadster Demo Shows Off Tech Spectacle, Question Marks on Outlook Linger

Sam (0:01)

We're back on Morning Trade Live. Let's focus on Tesla this morning. The stock is moving marginally higher after revealing its new Roadster model last night. More on that in just a second. But let's take a look at the chart first. Shares down more than 15% this year, but it's had quite the rebound since Q2 earnings, as you can see here, recovering from that slump.

A couple of months ago, Tesla stock up nearly 25% since July the 29th. It is the focus of the morning trade. Joining us now for a closer look is Alison Kosik, Markets Correspondent here at the Schwab Network. Alison, welcome.

Alison Kosik (0:35)

Thank you.

Sam (0:37)

Apparently, flying cars are real.

Alison Kosik (0:39)

Yeah. Well, apparently, according to this demo, this felt more like a movie set than a demo for this car. I mean, this thing, the Roadster, this is a next-gen Roadster. It flew, it drove upside down, it hit 60 seconds in under a minute. Now, this thing has been in development for nearly a decade, so maybe that's why we saw so much fanfare in Texas at this event, which lasted only less than 30 minutes. So here's what we saw. You're looking at the pictures. This high-energy Wows stage event was live streamed, kind of felt like a stunt show, and before the event Musk said the revamped Roadster would be the best of the last of the human-driven cars. Okay. So what do we see? You're seeing it.

This car use its fan suction system to generate enough of a downforce to drive upside down on a parabolic ramp, spin around and then activate the thrusters to glide to a perfect landing. Later, the Roadster did an aerial kick flip over a line of five Tesla vehicles before landing smoothly. And finally, for its last trick of this amazing demonstration, in a pre-recorded segment, the Roadster appeared to accelerate from zero to 60 miles per hour in less than a second using those thrusters, Sam. I mean, this was quite a show that was put on. Many are saying, you know, there's a little bit more as to why it was such a wow moment.

Sam (1:56)

Yeah. I mean, it certainly is interesting as far as, you know, bringing this stuff to life. I mean, you know, it certainly brings us back to, I don't know, what the Jetsons are. I suppose there's more.

Alison Kosik (2:08)

Yes, absolutely. Or maybe it's the next Bond car.

Sam (2:11)

Yeah. I suppose there's better analogies. But I always thought that the other car that he has looks something like out of Mad Max. Yes. Oh, absolutely. You see a lot of them driving around here in New York.

What are the analysts saying about this one right now? Because obviously, we've had a positive-ish reaction from the street. Obviously, it's been a tough week for tech. We know that. But it's up six-tenths right now. I saw Evercore was bullish.

What's been the response? What does this mean moving forward for Tesla? I mean, was this something that investors were looking at as for like another catalyst for some upside here?

Alison Kosik (2:46)

This is exactly what it is. JP Morgan, by the way, said production for this vehicle is targeted at 2028 versus the 2020 target. Obviously, there have been a lot of speed bumps to get this thing on the road. JP Morgan is keeping a neutral rating on Tesla after the company unveiled this second-generation Roadster.

You step out of the spotlight for this vehicle and analysts have a theory that the decision to actually release the Roadster, it really is an attempt to set the stage for a rumored Tesla Space X merger and I think that's why you saw so much fanfare and so much attention for this kind of show.

Sam (3:25)

Yeah, and I think that's what's really interesting is that you have had Space X up on a day like this. It's come off now, actually, I saw it was up in the pre-market down 1.3% right now, but it certainly seems like that conversation around that potential merger is gaining traction as far as the talk in the market. Alison, thank you so much for that. That was great. Alison Kosik there, joining us here around the desk. Let's trade the name now with Dan Deming, Managing Partner at KKM Financial. Dan, good morning, happy Friday to you.

Tesla, it's come off the lows of the July lows, as I said, about what, 25 or so percent, but just walk us through an example trade here.

Dan Deming (4:01)

Yeah, probably not the reaction that the market was hoping for. Certainly, it's still holding on to a slight gain, but well off the overnight highs. But I think longer term, again, it was a wow moment. I agree that certainly it's going to be heavily discussed. Now, what does it mean for the stock moving forward?