Analyst Perspectives: Oppenheimer and Wedbush Assess Tesla’s Performance and Prospects

In Q1, Tesla’s deliveries fell short of expectations, totaling 386,810 vehicles compared to the estimated 449,080. Despite producing over 433,000 vehicles, only 387,000 were delivered. Model 3/Y deliveries were 369,783, while other models and Cybertruck accounted for 17,027. Total production reached 433,371, slightly below the estimated 435,000.

Wedbush’s Analyst Dan Ives had expected challenges in Tesla’s Q1 delivery numbers, but they described the actual results as a complete disaster that’s difficult to justify or explain.

They consider this moment as critical in Tesla’s storyline, where Elon Musk must act decisively to reverse the negative impact of Q1 performance.

Failing to do so could lead to darker prospects for Tesla in the future, potentially disrupting the company’s long-term narrative.

The analyst noted that Tesla is currently facing challenges from two opposing trends of growth, and investor patience is wearing thin as a result.

This impatience is exacerbated by discussions surrounding Musk’s involvement in AI ventures outside of Tesla, board-related issues, uncertainties about Musk’s compensation in Delaware, and the likely relocation of Tesla’s incorporation to Texas.

Here’s a breakdown of Colin Rusch’s statements from Oppenheimer:

Rusch emphasizes that Tesla’s disappointing delivery numbers have raised concerns, particularly regarding gross margin levels, which are now under scrutiny.

He highlights the impact of Elon Musk’s controversial Twitter activity and personal views on politics, which have alienated potential buyers, especially those who initially supported EVs for environmental reasons. This shift in sentiment is affecting Tesla’s customer base.

Rusch predicts that pessimistic investors will likely draw attention to Tesla’s inventory buildup, equivalent to 11 days based on Q1 2024 deliveries. This surplus suggests a potential softening in demand, which could be a cause for concern.

It’s important to note that despite these concerns, Rusch reiterates his Outperform rating for Tesla.

RBC’s Tom Narayan affirms a Buy rating for Tesla, maintaining the target price at $298. Apart from its renowned electric vehicle sales, the company offers services, energy systems, and powertrain components. With manufacturing facilities in the U.S., China, and Germany, Tesla primarily derives its revenue from the U.S. market.

Baird has lowered Tesla’s price target to $280 while still maintaining an Outperform rating.

UBS analyst Joseph Spak noted Tesla’s Q1 deliveries fell short of expectations, signaling a demand slowdown. Despite unique production factors, the year-over-year delivery decline exceeds production decline, raising growth concerns. UBS maintains its Neutral rating and $165 price target, suggesting that current auto gross margin expectations ex-credits are too high.

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