Wedbush said Thursday that Tesla Inc. is facing dangerously tense times as demand in China remains weak, which is expected to weigh on first-quarter delivery data due to be released in the coming days.
Dan Ives, a long-time bullish analyst on Tesla, said the electric car maker experienced a “nightmare” first quarter amid a perfect storm caused by demand issues, leading to a sharp cut in average market expectations.
Tesla will release delivery data as a sales indicator a few days after the end of each quarter, and may release first-quarter delivery data as early as next Monday. The average estimate from a FactSet survey is that Tesla will deliver 457,000 electric vehicles in the quarter, up from 423,000 in the first quarter of 2023, but lower than the 494,000 expected at the end of January this year.
Ives wrote in a note to clients: “While some supply-side issues such as planned factory shutdowns and the Berlin factory fire have affected vehicle supply, there is no denying that for CEO Musk and Tesla, This has been a difficult quarter to look back on.”
Wedbush reiterated its outperform rating on Tesla stock but lowered its price target to $300 from $315, which is still 67% above the stock’s current price.
Ives said other issues Tesla faced in the first quarter included upgrades for the refreshed Model 3 Highland at its U.S. and Fremont plants, as well as mediocre sales in Europe.
But he said that as competition intensifies and price wars continue, China is the biggest challenge facing the company, and Tesla will work hard to deal with this challenge throughout 2024.
The above report stated: “Judging from the weak delivery data in the past two weeks, the baseline expectation of delivering 2.1 million vehicles this year may not be achieved at present. The delivery target of 2 million vehicles is more realistic, and our data will be adjusted downward accordingly.” .”
Wedbush now expects Tesla’s first-quarter deliveries in China to fall by 3% to 4% year-on-year. Ives expects the data to be released next Tuesday. “This will not be a moment of celebration for the bulls, but a ‘long-term pain rather than short-term pain’ quarter for Tesla investors.”
According to the report, the situation at Tesla is as negative as it has been in the past few years, and Musk and Tesla have been attacked by short sellers from all directions. But this time it’s not without reason. Tesla’s growth has been sluggish and profits have been squeezed by weak demand in China.
“Musk has reached a fork in the road, and Tesla must be allowed to get through this turbulent period, otherwise the days ahead may be even more difficult,” Ives said.
Wedbush is still optimistic about the company’s fully autonomous driving/Autopilot autonomous driving technology and believes that this is a key part of the disruptive technology story. But Ives said investors’ patience is wearing thin amid Musk’s comments about building AI systems outside of Tesla, questions about how boards use oversight powers, a Delaware court’s decision to overturn Musk’s compensation package, and The possible decision to move the company’s domicile to Texas are among the issues that are making investors impatient.
To turn things around, Ives wrote, Musk needs to give a formal range for margins and deliveries in 2024; discuss China issues and strategies to reverse the trend on a conference call; hold a battery/AI day to provide investors with a complete roadmap; commit to the Tesla CEO job over the next three to five years; and launch a real advertising campaign.
In the medium term, Wedbush remains optimistic about Tesla and expects the company to maintain its dominant position in the electric vehicle market.
“However, getting through this tense and difficult period will be decisive for Musk’s future and that of Tesla,” the report reads.
(This article is translated from MarketWatch. MarketWatch is operated by Dow Jones, the parent company of The Wall Street Journal, but MarketWatch is independent from Dow Jones Newswires and The Wall Street Journal.)
2024-03-29 02:25:00
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