The bears have been out for Tesla (NASDAQ:TSLA) recently with concerns around soft demand and rising competition ever-present.
But if those arguments sound familiar, well, that’s because they are. Looking back to the early months of 2023, Wedbush analyst Daniel Ives, a 5-star-rated analyst ranking in the top 2% of Wall Street’s stock experts, reminds us that the prevailing bearish narrative for Tesla at the outset of the year revolved around the belief that “demand was eroding and competition was increasing across the board.”
“Instead,” says Ives, “Musk made a poker move for the ages and cut prices globally with China front and center to catalyze volumes/units which should now impressively be in the 1.8 million range for 2023.”
Reaching those volumes, however, has come at a cost, with the company’s margin profile taking a hit. But while heading into 2024, this remains a “key hot button issue” for investors, Ives thinks the problem is abating. “To this point,” he says, “we believe margins have now stabilized and should move up from these levels with Auto GM heading back above the key 20% threshold during the course of 2024.”
The issues seen with demand in China are also improving, with “the Category 5 storm” that hit Tesla earlier in the year fading into the background. Tesla has now been raising prices and witnessing “steady demand” in this major region, and Ives expects Q4 Tesla volumes in China to “hit another record.”
For 2024, Ives thinks units in the 2.2 million to 2.3 million range – or amounting to 25%-30% year-over-year unit growth – is “very achievable.” Boosted by Model Y sales in China and Europe, there is even likely upside to that.
Looking even further ahead, while it is true global EV demand has “clearly moderated,” it should also be noted that this huge auto industry transformation is still in the early days with Ives estimating that by 2030, approximately 20% of autos will be EV based, with Tesla leading the charge.
But it’s not just cars driving Ives’ bullish thesis. The analyst believes the Street is not seeing the bigger picture here, comparing Tesla to another company once led by an outspoken CEO.
“The ‘golden vision’ at Tesla is now monetizing its super charger network with batteries and AI/FSD next adding to the sum-of-the-parts story for Tesla,” Ives summed up. “We view Tesla where Apple was in the 2008/2009 period as Cupertino was just starting to monetize its services and golden ecosystem with the Street not seeing the broader golden vision at the time.”
With all this to come, Ives thinks a new price target is due; as such, his objective moves from $310 to $350, suggesting shares have room for one-year growth of ~41%. Ives’ rating stays an Outperform (i.e., Buy). (To watch Ives’ track record, click here)
Not all are quite as bullish, however; the Street’s average target of $243.59 factors in the shares staying in a tight range for the time being. Rating wise, based on 12 Buys, 13 Holds and 5 Sells, the stock claims a Moderate Buy consensus rating. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
