As Tesla, Inc. gears up to reveal its first-quarter deliveries update, a notable analyst has made a move that can only be described as cutting. Wedbush analyst Daniel Ives, typically bullish on Tesla, sliced the stock’s price target down to $300 from $315.
Challenges Ahead: Ives pointed to a double whammy of troubles plaguing Tesla. The firm has struggled with issues on both the demand and supply fronts. China demand has been lackluster, with factory downtimes and the recent Berlin fire exacerbating supply issues for the electric vehicle giant.
Ives lamented, “There is no denying this has been a quarter to forget for Musk and Tesla.” The analyst highlighted additional hurdles such as Model 3 Highland upgrade problems at the Fremont factory and sluggish sales in Europe, compounding the company’s woes.
Given the challenging quarter, Ives revised his first-quarter delivery estimates downward to 425,000 units from 475,000 units. He attributed this adjustment to a confluence of demand challenges impacting sales and deliveries.
China’s Impact: Of utmost concern to Tesla and its stakeholders is the intensifying competition in China. Ives flagged a brewing price war in the key market that has made conditions increasingly difficult. He suggested that a 2-million-unit target for the year now appears more realistic compared to the initial 2.1 million estimate.
According to Ives, China deliveries may have slumped 3-4% year-over-year in the first quarter.
Weighing the Narrative: Ives opined that the impending Q1 deliveries update will not be met with cheers from bullish investors. He noted, “We believe the Tesla narrative is as negative as we have seen in the last few years.” Ives cited sluggish growth, compressing margins, and ongoing challenges in China as contributing factors.
Regarding Tesla CEO Elon Musk, Ives added, “For Musk, this is a fork-in-the-road time to get Tesla through this turbulent period. Otherwise, darker days could be ahead.”
Despite short-term headwinds, Ives expressed confidence in Tesla’s long-term prospects. He emphasized faith in the Full Self-Driving (FSD) and autopilot strategy, underscoring their importance in shaping the company’s future trajectory.
To navigate the current storm, Ives outlined key recommendations, including providing formal guidance on margins and deliveries for 2024, addressing demand issues in China, and hosting events to elucidate the roadmap for investors.
Ultimately, Ives maintained a bullish outlook on Tesla, foreseeing accelerated dominance in the electric vehicle market and signaling optimism that margins will stabilize with the growth of FSD/AI software.
Reflecting on the road ahead, Ives concluded, “Getting through this white-knuckle period will be a defining chapter for Musk & Co. and the future of Tesla.”
Tesla Price Update: Tesla closed Wednesday’s session with a 1.22% gain, reaching $179.83. However, the stock has seen a nearly 28% decline year-to-date.
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