Should You Buy Tesla Stock Before Oct. 10?

Oct. 10 might be the most important day in Tesla's (NASDAQ: TSLA) history. In two weeks, investors are going to get a front-row seat to the future of Elon Musk's electric vehicle (EV) empire. The stakes are high, and the margin for error is virtually nonexistent.

Let's dive into what makes this such a pivotal moment for Tesla.

What is happening on Oct. 10?

A lot of car manufacturers are interested in developing autonomous vehicles. Tesla has spent years building an autonomous driving platform dubbed Full Self-Driving (FSD), and on Oct. 10, the world may get a preview of how this technology will shape the company's future.

Tesla is referring to the high-profile event as "We, Robot." Musk has used the names "Robotaxi" and "Cybertaxi" for the company's autonomous driving platform.

Image source: Getty Images.

Why is the Robotaxi event so important for Tesla?

OK, so why is this event so important? For starters, it was originally scheduled for August. Now that the event has been delayed by three months, expectations are even higher.

But the bigger reason the Robotaxi event is a pivotal juncture in Tesla's history is that investors may finally get a detailed look at the company's artificial intelligence (AI) progress.

In a way, investors could think of self-driving cars as giant computers controlled by AI and robotics technology. FSD and Robotaxi are widely considered the major growth catalysts that could spur renewed interest in Tesla's EVs and enable the company to enter and disrupt new markets, including ride-hailing, car rental, and delivery services.

If the Robotaxi event is underwhelming or a unforeseen glitch occurs, you can be sure that the bears will come out of their caves and relentlessly question Tesla's capital expenditure (capex) and research and development (R&D) investments.

Is Tesla stock a buy before Oct. 10?

Let's take a trip down memory lane. Back in 2019, something unexpected happened when Tesla unveiled its Cybertruck SUV. During the demo, Tesla's head designer, Franz von Holzhausen, threw a ball at the truck's "armor glass" windows. The windows broke. That wasn't supposed to happen.

Embarrassing? Yes. Detrimental? No.

Although the initial setbacks with the Cybertruck inspired some reputational damages and delayed releases for Tesla, the wait appears to have been worth it. Despite being new to the market, the Cybertruck is outselling EV pickup trucks from Ford, Rivian, and many others.

A hiccup with the Robotaxi event won't spell the end of Tesla. However, I see the Cybertruck mishap and the Robotaxi unveiling as very different.

Despite the hype, Tesla's future doesn't hang on the Cybertruck. In a world where the SUV was scrapped and never released, Tesla would still be a manufacturer of high-quality EVs.

On the other hand, Musk himself has referred to Tesla as a robotics business. If the company fails to pull off the Robotaxi at scale, the long-term growth narrative surrounding Tesla has more than a couple of cracks in it. This leads me to another important detail.

Tesla stock has soared 22% during the month of September (as of market close Sept. 25). I think momentum traders have arrived and are trying to take advantage of volatility trends as the Robotaxi event nears.

Following day traders into momentum plays is usually a bad idea. As an investor in Tesla stock myself, I encourage others to sit on the sidelines for now.

The prudent strategy is to tune into the Robotaxi event and see what Musk and the team really show off. The momentum following the event will eventually subside, and investors will have ample opportunities to scoop up shares of Tesla at more reasonable valuations once the company proves its AI ambitions are bearing fruit.

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Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.