Is Tesla Bot a Catalyst for Tesla Stock?

One of the surprise announcements at Tesla‘s artificial intelligence event last week was a humanoid robot: Tesla Bot. Despite unveiling it with a dancing human in a robot costume, it was not a joke.

The electric car and green energy company (and now a robotics company?) hopes to have a prototype by next year. The humanoid bot will aim to help eliminate dangerous, repetitive, and boring tasks, Tesla CEO Elon Musk said after Tesla Bot was announced.

With such an exciting potential product, should investors start pricing this into the stock?

Absolutely not.

Meet Tesla Bot

With the Tesla Bot still in early development, specs on the new product were unsurprisingly sparse. Tesla did say it would be 5 feet 8 inches tall, weigh 125 pounds, walk at a speed of 5 mph, and be able to deadlift 150 pounds.

While Tesla Bot may seem “out there,” Musk said the company would be essentially employing technology it’s already developing for its vehicles.

“Tesla is arguably the world’s biggest robotics company,” Musk said during the event, “because our cars are like semi-sentient robots on wheels.” Tech used in its cars that could be utilized in Tesla Bot would include its neural nets for recognizing the environment, sensors, batteries, and actuators.

“It’s intended to be friendly, of course,” Musk said. Even more, there are precautions in place: The company will set it at a mechanical level so that you can run away from it and, if needed, “most likely” overpower it, the CEO added. Whew. Thank you, Tesla!

Why investors should be skeptical

Analysts seem to be largely ignoring Tesla Bot as a potential driver for the stock — and they’re right to do so.

Wedbush analyst Daniel Ives even called Tesla Bot “an absolute head scratcher.” Meanwhile, Wells Fargo analyst Colin Langan says the company’s 2022 target timeline for a prototype robot may be too optimistic. Neither of them increased their price targets for Tesla stock in response to the news.

The analysts are right to be raising eyebrows. Investors shouldn’t start pricing anything in until there’s a clear path to revenue and profits. If anything, the Tesla Bot could be viewed as a distraction and could be a net negative for the stock. But given the company’s history of doing extraordinary things and exceeding expectations, investors may want to at least refrain from counting the project against Tesla. Not only could it potentially turn into a driver for the business someday but it may be the type of project needed for Tesla to attract some of the world’s greatest minds in the artificial intelligence space.