It’s been an awful start to the year for Tesla (NASDAQ:TSLA). The EV leader’s Q4 print was dire, EV demand has stalled while ongoing price wars have been eating into margins. Meanwhile, a negative court ruling voided CEO Elon Musk‘s $56 billion compensation package from 2018, and a recent fire near Tesla’s Berlin factory has halted production.
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So, the bears have been feasting, sending the shares down 34% so far this year, with many on the Street claiming it’s now curtains for the Tesla growth story.
Amidst the prevailing gloom, Wedbush’s 5-star analyst, Daniel Ives, acknowledges the unprecedented negativity surrounding Tesla’s outlook. Yet, he cautions against prematurely dismissing the company’s potential.
“Taking a step back,” says Ives, “we have been here before with Musk/Tesla a number of times over the last decade as the doubters have said the Tesla story is done and electric vehicles are a fad, not a long term transformational trend that will change the auto industry.”
That’s not to say all is rosy in Tesla land. Having just returned from Asia, Ives confirms the price wars in China are “brutal.” That said, the analyst claims there’s a sense in the industry, that heading into spring/summer, many of the price cuts are “starting to subside,” which is obviously good news for both Tesla and the EV sector. And even though 1Q units are now “tracking softly” towards the ~430,000 level, Ives believes Tesla remains on track to surpass 2 million units in 2024 with 2.1 million (base) to 2.2 million (stretch) units “still hittable.”
And while the near-term is certainly challenging, given that price cuts are moderating, battery costs/production is “showing strong cost efficiencies,” and the roadmap for the next year includes a Model 2 (a sub $30,000 vehicle), Ives believes the stock is “way overshooting on the negative front.”
And that opens a big opportunity.
“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,” Ives summed up.
All told, Ives rates Tesla shares an Outperform (i.e., Buy), while issuing a $315 price target. The implication for investors? Upside of ~93% from current levels. (To watch Ives’ track record, click here)
That said, in contrast to Ives, most Street analysts are currently sitting this one out. Based on a mix of 18 Holds, 10 Buys, and 7 Sells, Tesla stock claims a Hold (i.e. Neutral) consensus rating. Nevertheless, the $205.22 average price target factors in one-year returns of ~26%. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
