On Thursday (28th) local time, Tesla closed down 2.25% again at $175.79. At this point, Tesla's stock price has fallen nearly 13% this month, and has dropped nearly 30% since the beginning of the year, becoming one of the worst performing components of the S&P 500 index. The main factor behind this is the slowdown in demand for Tesla's electric vehicles, accompanied by competition from Asian electric vehicle manufacturers.
Tesla told analysts during its January earnings conference call that "Tesla is currently in between two major growth waves. We are focused on ensuring that the next wave of growth driven by next-generation cars, energy storage, fully autonomous driving (FSD), and other projects is pushed forward as smoothly as possible." Earlier this week, Musk also stated in a memo to employees that his North American business will "force" customers to "install and activate" autonomous driving software on Tesla's new cars, and "take customers on a brief test drive before delivery.". "Almost no one truly realizes how well supervised FSD works. I know this will slow down delivery, but it is still a mandatory requirement," he said.
But the market doesn't seem to be very receptive. Tesla will release its first quarter delivery data next week, followed by its first quarter profit report on April 17th. Just before its release of key data, several Wall Street analysts this week lowered their expectations for its delivery data and further lowered its stock price target.
Sanford C. Bernstein analyst Toni Sacconaghi has lowered Tesla's delivery forecast for the first quarter as of March 31 by nearly 70000 vehicles to 426000 vehicles; Citigroup analyst Itay Michali also significantly lowered her first quarter delivery forecast from 473000 vehicles to 429000 vehicles; Deutsche Bank expects to deliver 414000 vehicles in the first quarter, compared to 427000 vehicles previously, and predicts that Tesla will deliver 1.91 million vehicles throughout the 2024 fiscal year, which is also lower than the previous forecast of 1.96 million vehicles. Morgan Stanley predicts Tesla's delivery volume for the 2024 fiscal year to be 1.954 million vehicles, lower than the previous forecast of 1.998 million vehicles.
Overall, according to Visible Alpha's survey and consulting data of 17 analysts, it is expected that Tesla will deliver approximately 458500 vehicles in the first quarter, which is higher than the 42.29 vehicles in the same period last year, but a decrease of more than 5% compared to the previous quarter.
Based on this, Saknagi lowered the target price of Tesla's stock by $30 to $120. He said, "Tesla has performed poorly so far this year, and we still find it difficult to see any catalysts. Tesla has experienced weak demand in China/Europe and has limited production of the US Model 3. We expect its growth in 2024 and 2025 to be lukewarm, which will continue to question the company's growth narrative." Citigroup has also lowered Tesla's target from $224 to $196, giving it a "neutral" rating. Economic agency Oppenheimer lowered Tesla's 2024 revenue forecast from $112.3 billion to $109.8 billion this week, and adjusted earnings per share from $3.10 to $3.01.
Nicholas Colas, co-founder of DataTrek Research, said, "The significant reduction in delivery expectations has indeed stifled investors' confidence in Tesla. Even if the data ends up slightly higher than expected, it is difficult to interpret it positively because the valuation of the stock price is often related to the weakest link of a company. For Tesla, this link is the automotive business."
Even Wedbush analyst Dan Ives, who has long been bullish on Tesla, lowered Tesla's target price from $315 to $300 this week and warned that Tesla will still face difficult times after experiencing poor first quarter delivery.
"Chinese demand is still very weak, and Tesla's delivery to China this year will only be 2 million vehicles, lower than previous expectations, and may decline by 3% to 4% annually in the future." He believes that Tesla is in between "two waves of growth," but he emphasizes that investor patience is starting to weaken. However, Avis still has "high confidence" in Tesla's FSD and its artificial intelligence (AI) software growth, but also admits that "the challenges it faces are leading to a bleak outlook in the near future.".