Tesla (TSLA) stock has rallied 47% over the past month, reflecting investor optimism following Donald Trump’s presidential election win. CEO Elon Musk’s immense support for Trump during the elections resulted in him being selected as the head of the newly formed Department of Government Efficiency (DoGE) alongside biotech investor Vivek Ramaswamy. However, several analysts remain cautious on the electric vehicle (EV) maker due to the ongoing headwinds, with the Street’s average price target for TSLA stock indicating a notable downside risk.
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Concerns over Tesla’s Deliveries
Tesla has been under pressure due to slowing EV demand amid macro challenges and intense competition. The company’s aggressive price cuts to boost demand have weighed on its margins. Based on the most recent data, Tesla’s sales of China-made EVs increased 15.5% from October but declined 4.3% year-over-year to 78,856 units in November, according to the China Passenger Car Association (CPCA). The month-over-month rise was driven by the company’s incentives heading into the end of the year.
Tesla is losing ground to automakers like BYD (BYDDF) in China, a very crucial market for EV players. The company has to deliver over 515,000 vehicles in Q4 2024 to ensure that its annual deliveries reflect an increase over last year’s 1.81 million units. However, several analysts are skeptical about Tesla’s Q4 deliveries.
Analysts Remain Cautious on Tesla
Based on intra-quarter data points for key regions, Goldman Sachs analyst Mark Delaney noted that Tesla is not currently on track to meet its aim of reporting higher vehicle deliveries in 2024 by delivering 515,000 or more vehicles in Q4. Accordingly, Delaney lowered his Q4 deliveries estimate to 510,000 units from 515,000. Delaney, who has a Hold rating on TSLA stock with a price target of $250, expects Tesla to offer further incentives in an attempt to hit its target.
Likewise, Guggenheim analyst Ronald Jewsikow expects Q4 deliveries to come in at 491,000, down from his prior forecast of 495,000 and way below the current consensus estimate. Jewsikow stated that while he expects growth in all major regions, currently no data point indicates over 500,000 deliveries in Q4. He believes that the demand elasticity continues to look unfavorable for Tesla in 2024.
Though Jewsikow’s demand elasticity analysis supports the 2025 growth target in the range of 20% to 30% in Tesla’s deliveries, he cautions that this growth expectation is almost completely dependent on new models. Jewsikow reaffirmed a Sell rating on TSLA stock but raised the price target to $175 from $156 to reflect the increase in the implied FSD (full self-driving) value in his valuation framework.
Is Tesla a Buy or Sell?
Overall, Wall Street is cautious on Tesla stock, with a Hold consensus rating based on 11 Buys, 13 Holds, and nine Sells. The average TSLA stock price target of $244.88 implies about 34% downside risk from current levels. Shares have risen nearly 49% year-to-date.
