Despite the negativity around Tesla, Inc. TSLA and its stock, an analyst on Tuesday reaffirmed his bullish stance.
What Happened: “This team-driven, rah-rah bipolarity is as extreme as extreme gets,” said CANACCORD Genuity analyst George Gianarikas in a note, excerpts shared by Tesla influencer Sawyer Merritt on X showed. “Come to think of it, it's actually kind of always been that way with Tesla. Every headline is either world-ending or world-beating according to the cognoscenti,” he added.
Stating that he is taking a balanced view, the analyst said the first-quarter deliveries miss was not only demand-driven but also supply-driven. The company could have sold more vehicles if it had sold all the updated Model 3s people wanted without any supply issues built its full capacity of Cybertrucks during the quarter, and did not experience shutdowns in Europe, he said.
Incidentally, a recent Wall Street Journal report said Tesla has delayed deliveries of its Cybertruck without giving a reason.
Gianarikas also delved into the recent layoff announcement from Tesla. One reason for the drastic step could be due to a further deep contraction in core auto margin in the first quarter, the analyst said. But it could also mean, the company was prudently right-sizing for a period of slow growth, he suggested.
“Clearly, the company is now contending with a period of slower growth — slower than they may have thought even at the beginning of 2024,” the analyst said. He, therefore, believes that the impending robotaxi reveal could be more important, as stakeholders will be keen to know whether the company announces a vehicle that can energize the market.
Weighing in on key personnel departures, Gianarikas said exits of senior executives such as Drew Baglino, who served as SVP of Powertrain and Energy, were a bit of a ” body blow.” It was reminiscent of the departures of the then-CFO Zach Kirkhorn in 2023 and Chief Technical Officer and co-founder JB Straubel in 2019, he said. The latter now sat on Tesla’s board, he added.
The analyst cited Musk’s comment that the eliminations were down with an eye on the “next stage of growth,” “While the recent one may be on a larger absolute size relative to history — it doesn't stick out that meaningfully on a percentage basis,” the analyst said.
CANACCORD maintained a Buy rating and a $234 price target for Tesla shares. On Tuesday, the stock closed down 2.71% at $157.11, according to Benzinga Pro data. The firm’s price target suggests the stock could appreciate about 49% over the next 12 months.
See Also: Everything You Need to Know About Tesla Stock
Why It’s Important: Tesla is striving to turn things around. The company has removed discounts for all U.S. vehicle models, excluding the demo cars, said Merritt in a post, as he noted that this was the first time since 2022, that the company offered no discounts in the U.S.
Responding to his post, Musk said, “We are simplifying and streamlining the whole Tesla sales and delivery system. It has become complex and inefficient.”
Future Fund’s Gary Black has been recommending that the company stop all price cuts, expeditiously launch a sub-$30,000 EV, and also deploy more resources to advertise the benefits of owning an EV. Other analysts and fund managers have called for clear communication from the management and CEO Elon Musk’s undivided attention to Tesla.
Additionally, the macroeconomic milieu is inclement right now. With interest rates at a 22-year high in the U.S. and the economic travails of China, one of Tesla’s key markets, the demand side of the equation will likely pose a problem in the near term.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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