Motley Fool Hidden Gems Investing - Are Robotaxis Coming to a City Near You?

Episode Date: April 20, 2026

Serial acquirer QXO has made a transformative $17 billion acquisition of TopBuild to create the second largest player in the industry. Motley Fool analysts Jason Hall and Matt Frankel break this deal down before discussing developments with Tesla’s Robotaxis and answering a listening question about selling stocks. Jon Quast, Matt Frankel, and Jason Hall discuss: -QXO’s $17 billion acquisition of TopBuild -Tesla’s Robotaxi expansion -Mailbag: Did I make a mistake by selling a stock that went up? Companies discussed: QXO (QXO), TopBuild (BLD), XPO (XPO), United Rentals (URI), Tesla (TSLA), Uber (UBER), Lyft (LYFT), Alphabet (GOOG)(GOOGL) Host: Jon Quast Guests: Matt Frankel, Jason Hall Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Are robo-taxis coming to a city near you? This is Motley Fool Money. Welcome to Motley Fool Money with the Hidden Gems team. I'm Jon Quast, and I'm joined today by Fool contributor Matt Frankel. Filling in for us this week is Jason Hall. We're going to talk about Tesla. We're going to answer questions from our mailbag about selling stocks. But first, we want to hit this multi-billion dollar lead story. That's that QXO is acquiring Top Build for a reported $17 billion. QXO is primarily a roofing business. What was so interesting to me is its market cap is only about $18 billion. So probably better to call this more of a merger than an acquisition. But this isn't even the first acquisition it's made this month. Earlier

this month announcing it's acquiring Kodiak Building Partners for $2.25 billion. This is just wow. John, no, this is an acquisition. Let's make no bones about that whatsoever. ever. For those that haven't followed the QXO story, this is really, and I'm a shareholder here. And the reason I'm a shareholder is I want to invest along with CEO Brad Jacobs. This is one of the greatest value creators for investors in his companies in history. He's founded something like eight different companies that reached a value of at least a billion dollars. And a few of those, United Waste, which was acquired, and XPO Logistics and United Rentals, which are still public, we're massive, massive winners for shareholders. With QXO, we're expecting the

Jacobs playbook to work again in a different industry. The playbook is, take an industry that has dozens to hundreds of players, acquire a bunch of them at reasonable prices, consolidate them together where it makes sense, and then apply a layer of technology to those businesses to drive efficiencies and process improvements, repeat that playbook and be very disciplined and do it for many years. And a lot of people are going to make a lot of money. Well, I mean, it certainly made the top of the headlines that I was looking for this morning, and that's why it made it onto the show. And I get it. Acquisitions are always exciting, but Matt, there are just so many instances where a business pays too much to buy another company

and it winds up destroying long-term shareholder value. I don't know. Does this QXO deal for top build make sense to you? Jason mentioned Brad Jacobs has a great history of value-adding acquisitions, paying the right price, and adding value afterwards. The deal does make QXO the second largest publicly traded buildings product developer in North America. This is QXO's largest deal by a mile. It's bigger than all of its previous acquisitions combined. We're really betting on the Brad Jacobs playbook to work here. But I do like this one for QXO. Top Build, they have very solid margins. It's trading for a reasonable valuation considering its growth and recent results, even after the acquisition premium. I think there are going to be a lot

of synergy opportunities between the companies. Jason knows it better than me, but I think this looks like all the makings of an accretive acquisition right off the bat. Yeah, I think that's right. Top Build, I've followed it for a while. They're an excellent, excellent operator. Our good friend Lou Whiteman and I were in a text group, and we've been chatting a little bit about this. He really stressed that. Lou is maybe the biggest Brad Jacobs fan of anybody at The Fool. He's followed him and invested with him for a long time. Finding maybe an even better operator than Jacobs is pretty special. The other thing, though, is that Top Build is in a niche, but pretty big industry in the installation

distribution business, but they also have a big installation business as well. You take that, you combine it with XPO's access to capital. That's why this deal is happening. There's a lot of money out there that wants to go along with Brad Jacobs. That could be some secret sauce here, giving Top Build, paired with Jacobs, more firepower to expand into more markets, both organically and through other acquisitions. Matt's absolutely right. This is by far the biggest deal that Jacobs has made at QXO. But it's now a player in multiple parts of the building distribution industry. Before, its biggest business was roofing products. The Kodiak deal got it into lumber and building materials. Now it's in insulation. I expect we're going to see further

expansion into the other segments of the construction and building products distribution industry. It's an $800 billion industry. Again, I'm a shareholder because Jacobs does this. He does this incredibly well and doesn't just build empires. He builds value for shareholders and we're going to see a very fragmented industry get consolidated more. There's so much opportunity to do these kinds of deals. Everybody was expecting another roofing business because that's looked like that was where he was going to start. And I think this caught a lot of people off guard. And it's a reminder that the goal is just to fragmented, take this fragmented industry and consolidate it in ways that make sense. Now you get to cross sell, you get to combine

customers across these businesses, there's a lot of ways that Jacobs can create value here. Is this one of those businesses that does better in a hotter real estate market? Or is it just one of those tried and true, it doesn't really matter what the real estate market is doing? It's going to be a little bit like, Matt, you'll love this. It's going to be a little bit like investment banks in a way that nothing's always working great. Parts of it do great when the economy and the market's going hot. Other parts, there's a lot of struggle. If you think about the roofing products business, for example, we have an aging housing stock in the U.S. There's a lot of deferred maintenance. There's opportunity there. That insulation business, that's largely a bet on

new home construction. That's the largest thing there. And their niche, because of doing the installation of that. It's a dirty, ugly kind of installation sort of business to do. So, having that business is the kind of thing that homebuilders, they're building a community, they want the whole community done. They're going to have one company that's going to come in and be the contractor and do all the installation. And that's how it's going to win. Different things are going to be working better when the market's great. And other parts are going to be doing fine when the housing market's not doing great. Well, it's certainly a trophy acquisition here for this company that's been known to make acquisitions. We'll have to wait and see how

competitors respond, how in the space that this big move, this big swing that it just took. So we'll just have to monitor that in the months and years ahead. But after the break, we'll be taking a look at what is new with Tesla's robo taxis. You're listening to Motley Fool Money. At Volvo, safety is not a feature, it's our purpose. Rigorous crash testing, decades of learning from real accidents, innovations that help prevent accidents before they happen, and help protect you when they occur. Going above and beyond industry standards, a vision of zero collisions.

Volvo's legacy revolves around you, because safety is about helping to keep you and everyone around you safe for life. Learn more at volvocars.ca slash safety. Welcome back to Motley Fool Money with the Hidden Gems team. So this is quite interesting. Tesla, over the weekend, it's announcing that its robo-taxis are entering into new markets. They've been operating in Austin, Texas since June of last year. Now they're saying that they're going into Dallas and Houston.

But I just kind of have to wonder, is there anything really to care about here? Because there's some reports saying that there's only one car in each of these two new markets. It feels a little bit crazy to talk about this when there's only one car, Matt. Yeah, I read the reports that only one car has been registered so far in each of these markets. Of course, having a single vehicle in Dallas and Houston is not material to Tesla's business at all. So far, the robo-taxi business isn't material to Tesla's business. But this is an important milestone. They're a long way away from the CyberCab becoming the highest production vehicle in its lineup, as Elon Musk has predicted. But the reality is that building a robo-taxi service

is extremely hard. Just ask GM, which is great at what they do. And Tesla's doing a pretty solid job of it so far. Well, I mean, what is the case that we should pay attention to this here? Because if I'm looking at this, I'm saying Tesla's already worth over a trillion dollars. It's all based pretty much on the auto business that it has right now. Shouldn't we focus on that and not this potential robo-taxi business that seems really far off in the future? Yes and no. I would first argue that the trillion-dollar valuation does have a lot of this kind of thing baked in. It's this, they have the energy business, the robotics business. There's a lot that they're planning to do. But it's really tough to overstate what a big opportunity

robo-taxis could be. As time goes on, it's looking like there are going to be fewer and fewer big winners as companies like GM have thrown in the towel. Tesla is going to have to compete for market share, but not with a ton of companies. Auto executives have called this a multi-trillion dollar market opportunity. I think GM was throwing around a $5 trillion figure for a while. And I think that might be pushing it. But I read an outstanding research report recently that they made a realistic case that robo-taxis are going to be a $190 billion revenue opportunity 10 years from now. For context, Tesla's entire revenue in 2025 was about $95 billion. If there's not that many different major competitors, that's a big pie. Robotaxi revenue, and here's the key point,

could have much higher margins than Tesla's core automaking business. That's really where the opportunity is. It makes sense that Tesla's investing heavily here. Don't read too much into the only one-car narrative. As long as Tesla keeps making forward progress at a reasonable rate without any major setbacks, like their cars running over somebody like GM had that essentially killed their business, it's good news for investors. Jason, when we talk about competition in this space, we look at the different players that are out there. Not all of these autonomous vehicles are built in the same way. There are technical differences between them. I'm just curious, do you think that Tesla, as it's looking

to scale? It's saying maybe eight to 10 metro areas this year, but does it have the technical expertise, the technical advantages to scale this technology? Yeah. This may not be a popular take. Before I get to my take here, let's talk about really the difference in what Tesla's doing from anybody else. That's really what it comes down to. It's sensor-focused. It's mostly camera-based, optical sensor-focused. Most of the rest of the industry is using LIDAR, other technologies. Radar is pretty popular across pretty much everybody. But what we're finding is that the benefit of doing that is that it's, from a hardware perspective, should be substantially cheaper, even though LIDAR has gotten much, much lower cost.

But I think, again, as much as Musk's had this long history of promising things are going to happen next year, they eventually happen, but it's four or five years later. I think as much as anything that might be promoting, but also, I think it's largely just how aggressive Musk is. Eventually, a lot of these things do happen. But that technical approach that Tesla's taking, we're seeing the challenges of it in real time. How much longer it's taken to get outside of Austin is much, much longer than Musk initially promised. The decision to not use technologies like LiDAR require the software and the hardware that's doing the processing to do a lot more heavy lifting. And it's clearly been the biggest challenge, I think, to scaling up autonomous taxis

compared to Waymo, which is definitely the leader in terms of, they have 11 markets they're in, they do a half a million paid rides a week. Now, they're geofenced. They're only in very specific areas. And Tesla says, look, our goal is to try to get into more places quicker over the long term. And we have billions of miles of cars driving autonomously in the wild. And that data is helping inform the decisions that we're making. But the reality is, it's been a much, much harder process. And the expansion, the slow expansion of the auto taxi business for Tesla does concern me that its technical approach might be, if not a failure, certainly ends up putting it far behind other competitors that just have a substantial lead. So I guess maybe the other

thing there to your point there, and I'm going to just kind of throw Matt here on the spot. If it is a more data software kind of play here, Matt, do you think that Tesla with XAI, kind of a sister company, does it have that software advantage to make a really strong competitive case here in the market? I would say yes. I mean, Tesla's been developing, I mean, how long has Elon been promising full self-driving? But they've been developing autonomous vehicle software essentially since the Model S came out. So they have a ton. And I mean, every mile a Model S is driven, essentially, has been recorded in one way

or another. So they have a ton of data. They have a ton of, I mean, they've had more cameras on their vehicle than anyone else. They've had more sensors on their vehicle than anyone else. So they do have somewhat of a technical advantage. And like I said, it's really hard. Jason just mentioned this, too. It's really hard to build a robo-taxi service.

A lot harder than companies originally thought. But it looks like it's going to be a two-horse race, essentially, right now. and, and I, I'd rather them do it slow and steady than to go too fast. Like I think GM did and have a, you know, a game changing setback. Uh, and, and both of these companies are doing a good job and there's room for both to be winners. I would, I would bet on Uber and Lyft to be winners from auto taxi before I would bet on anybody making the hardware. I'll throw that hot take in there. Okay. Well, and it may be time to bet on the technology when I finally ride in one i don't know when that'll ever happen but when we come back we're going to be taking a

question from your mailbag this is motley fool money new from nespresso blend wellness into your coffee routine with a coffee plus range infused with functional benefits choose the coffee you love with added b vitamins like coffee plus b12 to help support immune function and coffee plus b6 to keep your day moving or go with the flow and choose ginseng delight our new double espresso with ginseng extract. Whatever lies ahead, don't change your morning. Let your morning change you. Discover Coffee Plus on Nespresso.com. Welcome back to Motley Fool Money with the Hidden Gems team. One quick note, we want to make you part of the conversation. If you have a stock or investing question for Matt, myself, Jason when he's on, Rachel the other time so that she's on

most weeks. If you have a question for anybody, you can now email us at podcastatfool.com. We'd love to have mailbag segments whenever possible, so send in your questions, but remember to keep them Foolish. That email, again, is podcastatfool.com, podcastatfool.com. That is where we're going right now. From your mailbag questions sent in, this is from Patricio Venturi from Argentina, a country that I love and used to live in for a short time. Here's the question. Hey, Motley Fool podcast team, as you mentioned sometimes in the podcast, deciding to sell a stock is not always so easy to do, and it's what I struggle with the most. And he goes on to detail kind of how he developed an investment thesis for one

company, and he decided to sell that position. I'm not going to read the whole thing. It's a little bit long here. But basically, fast forward, he says, when I first bought, the tech and the product seemed cutting edge. It was promising. But as I followed the results, I started to say that maybe it was struggling and didn't seem to have as much opportunity for the future. And so wound up selling this stock at around $17 a share. And that was in December. Now the stock is trading at $20. Really feels like he made the wrong choice here by selling that stock. But to me, gentlemen, it sounds like Patricio is assuming he's made the wrong decision here because the stock went from $17 to $20 in four months. But my question here for you, Matt, is

can it be the right move to sell a stock even if you didn't time the top perfectly? I mean, I understand why it seems like that. I mean, the stock went up after he sold, and that's despite the market generally falling over that time. But I love this question because it brings up a great point that all investors should understand. And I can't say this loudly enough, you are not going to sell at the top. If you do, it will be because you got extremely lucky, not because your analysis was that spot on. In simple terms, stocks move for a variety of reasons, including for no logical reason at all over the short term. In fact, when I'm reading it, the listener's analysis sounds solid at first glance, and it sounds like they indeed sold for a

good reason. There are some excellent reasons to sell a stock and move on. Your original thesis for buying no longer applies. You're seeing material weakness or increased risk, which seems to be the case here, or simply because you need the money for something, just to name a few of them. But because the stock went up, and I think we're at a peak, is not one of them. Matt, that's so true. And I have a couple of thoughts that are going to tie in a little bit to what you already said there. And the first one is, I want to caution anyone, as you were saying, who's putting in the work to study the businesses that they own or want to own to not fall into the precision trap.

As you said, you can't sell the top. At best, we can just hope to be directionally on the right track. And even six months after selling a stock, we haven't collected enough data to find out if the broken thesis is really true or not and the business is going to struggle. Right now, we're still in the voting booth, right?

We haven't moved on to the weighing of the value of the business part that takes years to happen. So that's an important thing to remember. And I think this is just especially true on selling. Personally, I tend to be really glacial on selling with two exceptions. Number one is if a stock becomes such a large portion of my portfolio that I want to reduce the downside risk. I don't want to fall in love with my investments because I love them. I bought them to grow my wealth and sometimes take a little bit off the table because of the downside risk. but that has to be pretty large for me. My experience is that selling just on price

usually doesn't work out in my favor. I don't, it doesn't sound like that's what this listener did, but now they're, now they're, now they're measuring themselves on the price and not what the business is doing. So looking at the business performance six months later versus the stock performance is probably a better way to measure whether your analysis was right on. This brings me to my second thought when it comes to selling, Matt, you talked a little bit about this. If you've reached a financial goal and you don't need a stock, you need money. Okay. That's easy. But if you're planning on selling a stock and then reinvesting it, you got to get two decisions, right? Number one, you have to be right in your analysis that this is a business I should

sell. Then you have to be right in your analysis that this proceeds that I'm reinvesting, that this is a business that I should be buying. And for me, that's one of the reasons I'm glacial in selling. Unless there's a clear reason that it's time to sell. Sometimes I don't want to rush myself because it's really hard to get one decision right as an investor in stocks. Getting two decisions right, even harder. I want to just kind of summarize. The question that Patricio had was, what are the key signals? And Patricio, what I hear Jason and Matt saying here is that the things that you listed out, you talked about the tech, you talked about the product when you bought and you thought it was cutting edge and promising. That's a good

directionally thing to look at when you're buying a stock. You had an investment thesis, we call that. But then you said that you were looking at the earnings per share, the profit margins, the revenue, and it wasn't living up to your expectations, and that's why you sold. So what are the key signals? You're mentioning all the things right there. You're talking about the product that the company sells. You're talking about the financials of the business. Those are the key things. When it's no longer playing out as you intended, then yes, that is something that you say, hey, I had an idea here and it doesn't seem that my idea was right. Maybe it's time for me to move on. But the closing thought, and maybe you each can weigh in on this,

the closing thought I had was it seems like Patricio really likes buying stocks, like researching and buying things. And that's kind of the fun part for him. And just kind of, I wanted to mention And one of the key tenants in the Motley Fool investment philosophy is add new money regularly to your portfolio if you can. And what that does is it prevents you from needing to sell something in order to buy something else because you have new money that you're putting to work. And so just a thought from each of you on that. Matt? Adding new money to my portfolio, it's definitely part of the way I invest. Even when it comes to my retirement accounts, I'm not make a lump sum once a year contribution type of person. I am a contribute a few hundred dollars

here, a few hundred dollars there, and it adds up over the course of the year. It prevents me from trying to time the market both in terms of selling and in terms of buying because I can buy incrementally too and not have to worry about missing the boat on a run or anything like that. So I agree with what John said. It's definitely a great idea to contribute over time if you can. Yeah, I agree on the adding new money. One other perspective and sometimes just a little shift in our perspective that's useful in analysis, and this might be something Patricio and other people listening can add to their process if they're not, is I constantly ask myself, what am I missing? And in a case like this, what did I miss? What did I get wrong? Not what am I right about? You

can always find why you're right. It's finding the one thing that we're wrong about or that we missed that can save us from making a bad investment or questioning the decision that we made. And in this case, Patricio, you may go back and take a look at this and say, well, what did I miss? And you may see the same concerning trends with the business, and that might reassure you that you made the right decision. You might find something that you missed and say, you know what? I have conviction in this business again, and maybe I should be thinking about adding it back to my portfolio. That's the hardest part. And to me, that's one of the most fun part about what we do. Indeed, indeed. And it is fun. Let's make sure we always keep investing fun. Patricio,

thank you for the question, Che. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks to our producer, Dan Boyd, and the rest of the Motley Fool team. For Matt, Jason, and I, thank you so much for taking time to listen to the show today. We'll see you again next time.