Investor's Corner

Tesla remains volatile despite international Model 3 ramp, analysts’ optimistic outlook for 2019

Published

6 years ago

January 22, 2019

Simon Alvarez

Tesla stock (NASDAQ:TSLA) saw a steep, over 12% dive on Friday amidst news of a new round of layoffs and Elon Musk’s rather cautious tone about the company’s profitability in the fourth quarter and Q1 2019. As trading opened on Tuesday, TSLA stock seemed as volatile as ever, briefly showing some recovery after the opening bell before dipping into the red soon after.

In a way, the behavior of Tesla stock on Friday (and this Tuesday as of writing) was a bit strange. Not long after the company shared Elon Musk’s email explaining his reasons behind the 7% layoffs, after all, a number of Wall Street analysts covering the electric car maker expressed an optimistic view on Tesla, particularly as the company is now aiming to start breaching the international market with the Model 3, its most disruptive vehicle to date.

During a segment on CNBC’s Squawk Box, for one, Oppenheimer senior research analyst Colin Rusch, who has a $418 price target on the company, noted that Tesla’s recent job cuts were unsurprising and a likely sign of optimization.

“It’s not a huge surprise to see this. This looks to us like a mix of a proactive move in terms of cutting costs, … but also a bit of cleanup on the kind of massive push to get the Model 3 out this year. You never want to see a growth company cutting staff like this, but we’re not overly concerned,” Rusch said.

In a note to investors, Jefferies analyst Philippe Houchois, who has a $450 price target on TSLA, stated that the company’s reduced workforce suggests breakthroughs in productivity.

“Reducing headcount also suggests productivity gains. This is, in our view, (is) consistent with slower growth rates but mostly the scope to improve productivity and flow that we identified during our visit to the Fremont plant mid-November 2018,” the analyst said.

Baird analyst Ben Kallo, a longtime TSLA bull with a price target of $465 per share, noted that cost management would be crucial this 2019 as “Tesla transitions to its next phase of growth.” Wedbush analyst Dan Ives, who has a price target of $440 per share, stated that “Tesla will be able to emerge from the next 12 to 18 months” as an electric car maker that is stronger and more profitable.

Canaccord Genuity analyst Jed Dorsheimer, who has a $323 price target on TSLA, was more pronounced in his optimism for the company, stating that with the recent job cuts, “Tesla’s business is now set up for a more auspicious 2019.” Consumer Edge analyst Derek Glynn, who has a $350 price target on Tesla, noted that Elon Musk’s recent email suggested that “management is focused on achieving profitability each quarter after years of operating at significant losses.”

Former Tesla board member Steve Westly also took a similar stance, stating that the 7% job cuts are a sign that Elon Musk and Tesla’s management are taking the initiative to “right-size” the company and optimize it its more challenging, more ambitious future endeavors. This, according to Westly, gives the company a notable edge in the electric vehicle market.

“He is moving faster than anybody else, going global faster than anybody else, and today, Tesla is essentially the iPhone of the electric-car market. They’ve won the North American premium market race. The challenge now is to win the mass market, to go international. I think he is preparing the company to do that. I wouldn’t bet against him,” the former Tesla board member said.

That said, not everyone on Wall Street believes that Tesla’s recent job cuts bode well for the company. Citigroup analyst Itay Michaeli, who has a $284 price target on TSLA, mentioned in a note that the electric car maker’s lowered Q4 2018 guidance and 7% job cuts support the bear argument that the company’s stellar Q3 2018 results “weren’t sustainable.”

For now, Tesla is attempting to start deliveries of the Model 3 to two key international markets — Europe and China. Both territories present an important opportunity for the electric car maker, considering that Europe’s midsize sedan market is roughly twice as large as the United States.’ China’s electric car market, on the other hand, is the largest in the world. With Gigafactory 3 allowing Tesla to produce affordable variants of the Model 3 for the local market, the company’s electric sedan could prove to be a success in China.

As for Tesla’s upcoming competition this year, Oppenheimer analyst Colin Rusch notes that legacy automakers have some serious catching up to do.

“Let’s get realistic about what the competition looks like. I mean, people have been very excited about some of the vehicles coming out in 2018. One, those cars have been delayed. Two, the products haven’t been as exciting as people anticipated. We were just at the Detroit Auto Show this week, and we saw, you know, around ten EVs on the show floor, and none of them were particularly exciting,” the analyst said.

As of writing, Tesla stock is trading -1.04% at $299.12 per share.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Simon Alvarez

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Elon Musk praises Ray Dalio’s Bridgewater for accumulating TSLA stock

Published

3 weeks ago

February 14, 2025

Simon Alvarez

Credit: Tesla Asia/X

A recent 13-F filing from legendary investor and billionaire Ray Dalio’s Bridgewater Associates has revealed that the hedge fund has added over $62 million worth of Tesla stock (NASDAQ:TSLA) to its portfolio.

Elon Musk has praised the billionaire’s investment in a post on X.

Bridgewater’s TSLA stake:

As per Bridgewater’s 13-F filing, it currently holds 153,589 shares of TSLA, which costs $62,025,382.
The firm added the TSLA shares in the fourth quarter.
Tesla shares gained momentum after its Q3 2024 earnings call, and it only gained more strength after the election of U.S. President Donald Trump.
At the end of 2024, Tesla shares were up 62%, as noted in a MarketWatch report.
Tesla stock is still up 88% over 12 months despite a steep drop over the past month.

Smart move
— Elon Musk (@elonmusk) February 14, 2025

A vote of confidence:

Bridgewater Associates is one of the largest hedge funds in the world, so the firm’s stake in TSLA could be interpreted as a vote of confidence in the electric vehicle maker.
Elon Musk has praised the firm’s investment. In a post on X, Musk noted that Bridgewater’s investment was a “smart move.”
Elon Musk has been quite consistent on his idea that Tesla could eventually become the world’s most valuable company. He emphasized this point during the Q4 2024 earnings call.
“I see a path. I’m not saying it’s an easy path but I see a path of Tesla being the most valuable company in the world by far. Not even close. There is a path where Tesla is worth more than the next top five companies combined,” Musk said.

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

Investor's Corner

Tesla (TSLA) gets $475 price target and “Buy” rating from Benchmark

Published

3 weeks ago

February 12, 2025

Simon Alvarez

Credit: Tesla

Tesla shares (NASDAQ:TSLA) have received a “Buy” rating and a $475 per share price target from Benchmark.

Benchmark’s price target is based on 68.2 times its 2028 earnings before interest, taxes, depreciation, and amortization (EBITDA), as noted in a Morningstar report.

Tesla rating:

In a note to clients, Benchmark analyst Mickey Legg noted that Tesla has outlined a path towards more growth through several of its initiatives.
These include Tesla’s work in autonomous driving systems, robotics, and energy generation.
The company could also make more headway into the electric vehicle segment.
“The company has outlined a path for growth with a more affordable vehicle scheduled for 1H25, unsupervised full self-driving as a paid service this June in Austin, TX, and Optimus robot production ramp through 2026 and beyond,” the analyst stated.

$TSLA +1.8% pre-mkt as Benchmark initiates TSLA with a Buy rating and $475 price target. pic.twitter.com/KT6BTTW5kJ
— Gary Black (@garyblack00) February 12, 2025

More potential:

While he sees potential in Tesla, the Benchmark analyst noted that his current model only incorporates vehicle growth.
Thus, there could be “significant potential upside” if the company’s autonomous vehicle program and Optimus are scaled.
“Tesla’s market leadership, near-term catalysts, strong management, and diversified business justify the stock’s market premium,” Legg noted.

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

Investor's Corner

Tesla is ‘better-positioned’ as a company and as a stock as tariff situation escalates

Published

1 month ago

February 3, 2025

Joey Klender

The Cybertruck-towed Model Y ad at Hayden Planetarium. Credit: Tesla North America | X

Tesla is “better-positioned” as a company and as a stock as the tariff situation between the United States, Mexico, and Canada continues to escalate as President Donald Trump announced sanctions against those countries.

Analysts at Piper Sandler are unconcerned regarding Tesla’s position as a high-level stock holding as the tariff drama continues to unfold. This is mostly due to its reputation as a vehicle manufacturer in the domestic market, especially as it holds a distinct advantage of having some of the most American-made vehicles in the country.

Analysts at the firm, led by Alexander Potter, said Tesla is “one of the most defensive stocks” in the automotive sector as the tariff situation continues.

The defensive play comes from the nature of the stock, which should not be too impacted from a U.S. standpoint because of its focus on building vehicles and sourcing parts from manufacturers and companies based in the United States. Tesla has held the distinct title of having several of the most American-made cars, based on annual studies from Cars.com.

Its most recent study, released in June 2024, showed that the Model Y, Model S, and Model X are three of the top ten vehicles with the most U.S.-based manufacturing.

Tesla captures three spots in Cars.com’s American-Made Index, only U.S. manufacturer in list

The year prior, Tesla swept the top four spots of the study.

Piper Sandler analysts highlighted this point in a new note on Monday morning amidst increasing tension between the U.S. and Canada, as Mexico has already started to work with the Trump Administration on a solution:

“Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars.”

However, with that being said, there is certainly the potential for things to get tougher. The analysts believe that Tesla, while potentially impacted, will be in a better position than most companies because of their domestic position:

“If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America. [There is a possibility that] Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face).”

There is no evidence that Tesla will be completely bulletproof when it comes to these potential impacts. However, it is definitely better insulated than other companies.

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Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.