Tesla, Inc.’s TSLA first-quarter deliveries missed the mark and disappointed investors, as seen by a 6% drop in the company's stock on Monday. But a top analyst still sees some light at the end of the tunnel.
What Happened: According to Adam Jonas, an analyst at Morgan Stanley, Tesla can still achieve CEO Elon Musk's ambitious delivery goal for 2023. Jonas has an Overweight rating for Tesla shares and a $220 price target. He stated that a 2-million-unit delivery rate is achievable for Tesla, with the ramp-up of production and further price cuts.
Jonas's Take: Commenting on the first-quarter deliveries number, the analyst noted that the company ended the quarter with 13 days of supply inventory, based on 75 selling days per quarter.
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"The first-quarter numbers annualize to just under 1.7 million units and production annualizes to 1.76 million units," Jonas said.
He anticipates that the ramp-up of Austin and Berlin, which have a production rate of 4,000 units per week, will collectively add 100,000-200,000 units to the first-quarter annualized rate.
By boosting output at Shanghai and Fremont, and inventory build, fiscal year deliveries of 1.9 million units to 2 million units are achievable, he said.
Potential Downers: Jonas believes that given the slowing economic environment, increasing pressure on financial institutions' willingness to lend, and competition from BYD Co Ltd BYDDY BYDDF, Tesla and its EV rivals may have to cut prices further to realize their goals.
He added, "We are of the opinion that without the aggressive price cuts, Tesla sales may not have grown on a sequential basis, a sign that even the most dominant EV player is not invulnerable to a slowing macro and competition."
Tesla Price Action: Tesla closed Monday’s session down 6.12% at $194.77, according to Benzinga Pro data. The stock edged up 0.20% to $195.15 in premarket trading on Tuesday.
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Read Next: Tesla Disappoints Analysts, Attention Shifts To Margins As EV Maker 'Undermines' Profitability
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