Will Tesla’s CyberCab Leave Uber in the Dust?

Will Tesla’s CyberCab Leave Uber in the Dust?

Tesla TSLA Uber

Earlier this week, shares of Tesla  (TSLA)  shot higher despite a weak earnings report. Investors were enthused by the EV maker’s prediction for an increase in sales in 2024.

EV sales are Tesla’s bread and butter, but the Austin-based automaker has ambitions far beyond the typical automotive experience.

Recently, Tesla announced it will introduce its self-driving robotaxi, expected to be called Cybercab, this August. By using a series of cameras and sensors, an autonomous vehicle theoretically can navigate its environment better than the average human driver.

Tesla’s promise of a fully autonomous vehicle is nothing new. In fact, the first version of Tesla’s Autopilot was announced in October 2014. Ten years later, that quest is on the verge of shaking up the ride-sharing industry, with the promised reveal of the Cybercab on August 8.

Some investors assume that Tesla’s eventual entry into the ride-sharing industry will create turmoil for San Francisco-based Uber  (UBER) , which dominates the U.S. market. That’s a reasonable assumption, but there are a few factors to consider.

The introduction of the Cybercab this August will not correspond to its availability. For example, Tesla’s Cybertruck was introduced in 2019, four years before the first deliveries of the futuristic, angular vehicle. Tesla did deliver on its promise, but it took considerably longer than expected.

Also, investors may be unaware that Uber encourages its drivers to use Tesla products. Uber offers up to $2,000 in incentives for drivers who purchase a new Tesla. This is in addition to the $7500 Federal Tax Credit for EV purchases.

Uber also offers a zero-emissions incentive that allows its drivers to earn an extra $210 per month while driving an EV.

CyberCab is scheduled to be introduced on August 8, but it could be years before consumers actually use that EV for ride-sharing purposes.

That’s why I believe the recent pullback in Uber presents a trading opportunity.

Shares of Uber reached an all-time high in February (point A), but have fallen nearly 15% since then. The company is scheduled to report earnings on May 8.

My strategy for Uber consists of entering a half-sized position now (point B), and possibly adding to it after earnings. If the stock drops below its 200-day moving average (red), currently located near $58, I’ll close the position (point C).

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