Investor's Corner
Tesla remains volatile despite international Model 3 ramp, analysts’ optimistic outlook for 2019
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.
Tesla bull Wedbush has responded to the company’s lackluster Q1 delivery figures, which were released on Wednesday morning in a new note from analyst Dan Ives.
Tesla reported deliveries of 336,681 vehicles in the first quarter of the year, a far cry from the Wall Street estimate of 352,000 and whisper numbers of roughly 350,000. At first glance, it seems to be a disaster, but Tesla said it lost “several weeks of production” in Q1 due to the ramp of the new Model Y at all four of its vehicle production factories.
This could be part of the reason that the company experienced a quarter of this performance, but there are also factors stemming from CEO Elon Musk’s involvement in the U.S. government, which has created some pushback in various markets.
It’s tough to say how much of each issue caused this type of quarter, but Ives wrote in a note to investors that Wedbush could not look at this “with rose-colored glasses,” as the performance “was a disaster on every metric.”
Ives believes it is time for Musk to make a move:
“The Street and us knew a bad 1Q was coming but this was even worse than expected. The time has come for Musk….it’s a fork in the road moment. The more political he gets with DOGE the more the brand suffers, there is no debate. This quarter was an example of the damage Musk is causing Tesla. This continues to be a moment of truth for Musk to navigate this brand tornado crisis moment and get onto the other side of this dark chapter for Tesla with much better days ahead.”
Interestingly, the stock dropped over 5 percent after the delivery report. It quickly rebounded 8 percent and is currently up over 5 percent on the day after a report from Politico stated that Musk and President Donald Trump have discussed the CEO stepping back from the Department of Government Efficiency (DOGE).
Based on that, it seems that investors were looking for Musk to step back from his government duties and show more public attention to Tesla. Realistically, we do not know how much of his time is being devoted to Tesla and its EV initiative. However, it seems investors were ready to hear something along the lines of Musk being more involved and speaking openly about Tesla and its projects.
It’s not all bad. Ives still recognizes Tesla’s prowess with the rollout of robotaxi and Full Self-Driving and how much impact it could have moving forward:
“Autonomous remains the biggest transformation to the auto industry in modern-day history and in our view, Tesla will own the autonomous market in the US and globally with the launch of unsupervised FSD in Austin kicking off the autonomous era at Tesla that we value at $1 trillion alone on a sum-of-the-parts valuation…”
With that being said, he also wants Musk to balance responsibilities with DOGE and Tesla:
“BUT…Musk needs to stop this political firestorm and balance being CEO of Tesla with DOGE. The future is so bright but this is a full blown crisis Tesla is navigating now and its primarily self-inflected. We remain firmly bullish on the long-term Tesla story but Musk needs to get his act together or else unfortunately darker times are ahead for Tesla.”
Tesla shares are trading at $283.01, up 5.42% at 1:57 p.m. on the East Coast.
Investor's Corner
Tesla (TSLA) shares date for “Company Update” and Q1 2025 earnings call
Tesla seems to be planning something slightly different for the upcoming event.
Tesla (NASDAQ:TSLA) has announced the date for its upcoming first quarter 2025 earnings call.
Interestingly enough, the company seems to be planning something slightly different for the upcoming event.
Tesla Q1 2025 Earnings Call Date
As shared by Tesla in its Q1 2025 vehicle production and delivery report, the company would be holding its first-quarter earnings call on Tuesday, April 22, 2025, at 4:30 p.m. Central Time / 5:30 p.m. Eastern Time. Similar to past earnings calls, the event will be livestreamed. An archived version of the session would also be shared on the company’s website.
Prior to the earnings call, Tesla will be releasing its Q1 2025 Update Letter. The Q1 2025 Update Letter will be released after markets close on April 22.
A Company Update
Tesla enthusiasts and TSLA bulls have observed that the electric vehicle maker adjusted its wording a bit in its Q1 2025 vehicle delivery and production report. As could be seen in the release, Tesla noted that it would also be holding a “Company Update” on April 22. This is the first time that such an event has been referenced by the electric vehicle maker with its quarterly earnings call.
“In addition to posting first quarter results, Tesla management will hold a live company update and question and answer webcast that day,” Tesla wrote in its Q1 2025 vehicle delivery and production report. Tesla also referenced a “Company Update” in a post on its official X account.
Expectations are high that Tesla will discuss some of its highly anticipated projects during its Company Update. These may include, among other things, new affordable vehicles that were mentioned in the Q4 and Full Year 2024 Update Letter.
“Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025. These vehicles will utilize aspects of the next generation platform as well as aspects of our current platforms and will be produced on the same manufacturing lines as our current vehicle line-up,” Tesla wrote.
Investor's Corner
Tesla (TSLA) reports 336,681 vehicle deliveries for Q1 2025
The report was published on the company’s Investor Relations website.
Tesla (NASDAQ:TSLA) has released its first quarter 2025 vehicle delivery and production report.
The report was published on the company’s Investor Relations website.
Q1 2025 Deliveries
In the first quarter, Tesla delivered a total of 336,681 vehicles globally. This is comprised of 323,800 Model 3 and Model Y, as well as 12,881 units of Tesla’s other models.
In comparison, Tesla’s company-compiled consensus indicated that analysts were expecting 377,592 vehicle deliveries for Q1 2025. FactSet estimates were even more optimistic, with analysts expecting vehicle deliveries of 407,900 units in the first quarter.
Q1 2025 Production
Tesla produced a total of 362,615 vehicles in the first quarter across its factories globally. From this number, a total of 345,454 units were comprised of the Model 3 and Model Y, and 17,161 were comprised of the company’s other models.
In its Q1 2025 vehicle production and delivery report, Tesla noted that the changeover of its Model Y lines across Gigafactory Texas, Fremont Factory, Gigafactory Shanghai, and Gigafactory Berlin, led to the loss of several weeks’ worth of production in the quarter. The vehicle, however, is now being ramped.
TSLA Reaction
While Tesla missed analysts’ expectations, investors do not seem to be too disappointed. As per writing, TSLA stock is just down 1.87% at $263.43 per share.
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