Elon Musk wants you to stop thinking about Tesla (TSLA) just like a car company.
Yes, the electric vehicle manufacturer does indeed make… electric vehicles. But the CEO hopes people will look beyond that particular product.
Musk has said that Tesla “should really be thought of as about a dozen tech startups, many of which have little to no correlation with traditional auto companies.”
“Tesla is currently between two major waves of growth,” Tesla told analysts during the company's presentation. January results call. “We are focused on making sure our next wave of growth driven by next-generation vehicles, energy storage, fully autonomous driving and other projects is executed as well as possible.”
Fully self-driving, or FSD, came into the spotlight earlier this week when Musk told Tesla employees that it would be “mandatory” for its North American operations to “install and activate” the software in the new Tesla vehicles and “take customers on a short test drive before delivering the car.”
“Almost no one realizes how well (supervised) FSD works,” Musk wrote in the memo. “I know this will slow down the delivery process, but it is still a strict requirement.”
Image source: Getty Images.
Analysts revise Tesla delivery estimates
Musk has said that Tesla, which will report its first-quarter earnings on April 17, is in talks to license the technology to a “major” OEM and is “very open to licensing our fully autonomous driving software and hardware to other automotive companies.
Cars are still the biggest part of Tesla's DNA. While Musk told analysts about “two big waves of growth” earlier in the year, the company reported disappointing earnings that included a lack of specific guidance for 2024 earnings.
Related: Tesla Stock Rises as Elon Musk Pushes Key technology Linked to Profit Growth
Tesla posted weaker-than-expected fourth-quarter earnings of 71 cents per share on $25.17 billion in revenue. Both figures fell short of Wall Street forecasts despite record deliveries of 484,507 vehicles during the last three months of the year.
Tesla shares fell after the earnings release, with Wedbush analyst Dan Ives, a longtime Tesla bull, calling the report “another conference call about a disaster” with Musk at the helm.
The company also said that 2024 growth rates, in terms of vehicle deliveries, would be “noticeably lower” than 2023 levels.
And now, with critical delivery data due next week, Wall Street analysts are taking another look at Tesla's price targets.
Citi analyst Itay Michaeli lowered the company's price target on Tesla to $196 from $224, while affirming a neutral rating on the stock.
Michaeli also cut his first-quarter delivery estimate, from 473,300 to 429,9000, to reflect recent data.
The first-quarter setup for Tesla “looks tough based on aggressive consensus estimates,” the analyst told investors in a research note.
In recent weeks, consensus estimates have moved lower, but March data has also been disappointing, Michaeli said. He added that Wall Street estimates still look too high, not only for 2024 but also for 2025.
Tesla-CATL a 'game changer'?
Bernstein analyst Toni Sacconaghi lowered his Tesla price target by $30 to $120 per share on March 26, while also cutting his forecast for first-quarter deliveries by nearly 70,000 units to 426,000.
So far this quarter, “Tesla has experienced weak demand in China and Europe and has limited Model 3 production in the United States,” Sacconaghi said.
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“Despite the stock's poor performance so far this year, we struggle to see a catalyst for Tesla. “We expect tepid growth in 2024 as well as 2025, which will challenge the company's growth narrative,” the analyst said.
On Monday, Oppenheimer lowered his initial delivery estimates for Tesla.
For the first quarter, the firm foresees deliveries of 468,000 vehicles, according to Invest.comdown from 509,000, and lowered its full-year 2024 delivery forecast to 2.13 million vehicles from 2.17 million.
As a result, Oppenheimer analysts expect Tesla's 2024 revenue to be $109.8 billion, with adjusted earnings per share of $3.01. That's down from its previous forecasts of $112.3 billion in revenue and adjusted earnings of $3.10 per share.
Its projections for 2025 and 2026 remain unchanged, at $141.7 billion with earnings of $4.35 per share and $173.3 billion with earnings of $5.67 per share, respectively.
Oppenheimer analysts also addressed the question of fully autonomous driving.
“With TSLA signaling an acceleration in FSD development following significant investments in computing power and broader deployment of V12 FSD, enabling accelerated system training with real-world data,” they said, “we believe the company is setting the stage for more software.” drove revenue growth as it prepares to launch Model 2.”
“As we cut estimates, we believe the 1Q24 report could lead to a final near-term cut to TSLA estimates,” they added.
Meanwhile, Chinese electric vehicle battery maker CATL is reported to be in talks with Tesla and other unnamed automakers to license its battery technology in the US rather than building its own plant there, The Wall Street Journal. reported on Monday.
Morgan Stanley called the United States an underpenetrated EV market “in need of cheap, high-quality battery technology, while China is a highly penetrated EV market with an oversupply of batteries.”
The firm said in a research note that a Tesla-CATL partnership “could be a game-changer.”
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