Shares of electric vehicle leader Tesla Inc TSLA have fallen in 2024 and could see continued downward pressure after recently reporting disappointing first-quarter production and delivery figures.
An analyst gives insights on the company’s direction after the recent delivery report.
The Tesla Analyst: Goldman Sachs analyst Mark Delaney maintains a Neutral rating on Tesla and lowers the price target from $190 to $175.
Related Link: Tesla Q4 Earnings Highlights: Revenue Miss, EPS Miss, Model Y A Global Bestseller, Next-Gen Vehicle Update And More
The Analyst Takeaways: The price target and earnings estimates for Tesla are lowered by the analyst to reflect the weaker than expected first-quarter deliveries.
Deliveries of around 387,000 units were down 20% quarter-over-quarter and down 9% year-over-year. After the latest delivery figure, Delaney thinks the conversation on Tesla stock will shift to items like volume growth, pricing, gross margins, full self-driving and non-auto segments.
The analyst said Tesla is currently in a period that is between growth waves.
"Ramping Cybertruck and the new Model 3 could be helpful on that front, and we also believe a refreshed version of the Model Y could be a positive driver in the intermediate term," Delaney said.
Headwinds for volume growth include the timing of its low-cost vehicle and competition, according to the analyst.
"We assume that Tesla will start low-volume shipments of a vehicle using the low-volume shipments of a vehicle using the low-cost platform for consumers in late 2025, and if this vehicle were delayed than we believe it would be a meaningful negative for the stock."
Delaney said vehicle pricing and gross margins also remain a key factor for Tesla stock.
"Whether Tesla will be more disciplined on pricing in a sustainable way going forward is likely to be a debate, especially with Tesla having built inventory with production ahead of deliveries."
The analyst said full self-driving (FSD) remains a key question mark as the company works towards self-driving capabilities and higher software revenue.
"Our current view is that we see Tesla as a leader in AI and software technology in the auto space, and we see software & services as a potentially meaningful contributor to Tesla's 2030 earnings."
The analyst said a true robotaxi without a driver could take years of testing and validation. An Aug. 8, 2024 event to share additional details on the robotaxi could answer more questions on the timeline.
Another key for Tesla going forward is growth in segments like Services and Energy, Delaney said in the investor note.
Delaney also shares in the note that net promoter scores for Tesla have been trending lower, which could show lower brand sentiment for the electric vehicle leader.
While the price target is lowered, Delaney said a positive view remains on Telsa's "long-term growth potential in the market."
TSLA Price Action: Tesla shares are up 1.5% to $175.61 on Tuesday, versus a 52-week trading range of $152.37 to $299.29.
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