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Tesla stock sentiment ‘overdone’ as 2.1m delivery target takes focus: Wedbush

Credit: Tesla

Tesla stock (NASDAQ: TSLA) has been subject to negative sentiments that are “overdone,” according to Wedbush analyst Dan Ives.

Ives also believes Tesla can achieve a base delivery goal of 2.1 million units this year, with a “stretch” estimation of 2.2 million cars being delivered. The final three quarters of the year will have to prove to be an entirely different story than Q1 because the company is “tracking softly towards the ~430k level,” Ives writes in his note.

The consensus surrounding Tesla stock in the early portion of the year stands as questionable in terms of demand, production, and the advancement of its product line. Some analysts have even called Tesla’s lineup stale, stagnant, and aging.

While demand seems to be slowing slightly, production has been affected by a factory shutdown in Germany due to unforeseen circumstances that are out of Tesla’s hands. In the United States, most of the company’s focus has been on the launch of the new Model 3 and the Cybertruck.

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The new Model 3 could help secure return customers who want the newest version of the company’s most affordable vehicle, and the Cybertruck production ramp is slowly picking up pace, but will likely not substantially contribute to the overall delivery figures of the first half of the year.

There are certainly some indicators that Tesla is due to have a slower year in 2024. The company stated that its growth rate could be slow due to the focus on the next-generation platform, which is set to hit the market in the latter half of 2025.

Additionally, the projected start of 2024 has been slower than what most would have anticipated, which puts a lot of eyes on Q1 delivery and production numbers.

However, Ives feels these negative thoughts are overblown and out of context:

“We believe the stock is way overshooting on the negative front as the demand story for Tesla is more in stabilization mode heading to the rest of 2024, price cuts are moderating, battery costs/production is showing strong cost efficiencies, and a Model 2 (sub $30k vehicle) is on the roadmap for the next year. In the near-term, it’s not roses and rainbows with demand sluggish for 1Q, the Berlin arson shutdown, and noise around the Musk comp package. That said, we believe the risk/reward is extremely compelling at these levels with the AI story and FSD making major strides at Tesla, and, in our opinion, represents a valuation that could exceed $1 trillion as this next chapter of the Tesla growth story plays out in the field.”

While Ives notes the negative sentiment is “overdone,” he does acknowledge the headwinds the company will face this year due to the various factors that are going to present challenges for Tesla.

Ives also writes that the Tesla Board had three non-negotiables to stop the bleeding for the stock:

1. Create a new comp package that supersedes this 2018 one along with a new package post proxy that will be voted at the next shareholder meeting in May

2. Devise a new comp package that would get Musk directly to the 25% voting share bogey he has discussed over the past month and voted on at the next shareholder meeting

3. We believe Tesla moving to Texas would clear the way for the Board to go down the path to get Musk towards the 25% voting rights and do a comp package that supersedes the 2018 plan; making the Delaware ruling noise.

Ives and Wedbush maintained the Outperform rating on the stock and the $315 price target.

Disclosure: Joey Klender owns Tesla stock.

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Tesla stock sentiment ‘overdone’ as 2.1m delivery target takes focus: Wedbush
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