Investor's Corner
Tesla (TSLA) drops in the aftermath of Q1 earnings: Here’s Wall St’s take
Tesla stock (NASDAQ:TSLA) experienced a 3% drop on Thursday’s intraday as the electric car maker felt the aftermath of its Q1 2019 earnings. The company posted a loss of $702 million or $4.10 a share in the first quarter, which is almost comparable to Q1 2018’s loss of $4.19 per share.
Tesla CEO Elon Musk and the company’s executives explained during the Q1 2019 earnings call that the company’s lower-than-expected performance was due to one-time items and circumstances such as delivery delays for the Model 3 in Europe and China. With Tesla back in the red, here is what Wall Street analysts are now saying.
Wedbush analyst Daniel Ives, a longtime TSLA bull, downgraded Tesla from “Outperform” to “Neutral” while adjusting his price target for the company from $365 per share to a far more conservative $275 per share. Ives also penned a scathing note on Thursday, calling Tesla’s Q1 results as one of the “top debacles” Wedbush has ever seen, and criticizing the company’s executives for their belief that demand and profitability will “magically” return in the coming quarters.
“In our 20 years of covering tech stocks on the Street, we view this quarter as one of the top debacles we have ever seen while Musk & Co. in an episode out of the Twilight Zone act as if demand and profitability will magically return to the Tesla story. Ultimately we believe the company’s guidance is aggressive and management/board is not taking aggressive enough cost-cutting actions and shutting down future endeavors to preserve capital and give a sustained path to profitability for the Street. We no longer can look investors in the eye and recommend buying this stock at current levels until Tesla starts to take its medicine and focus on the reality around demand issues which is the core focus of investors,” Ives wrote.
Ryan Brinkman of JP Morgan noted that a negative reaction was already expected considering Elon Musk’s previous comments about Tesla’s inability to turn a profit in Q1. Brinkman, who has an “Underweight” rating and a $200 price target on TSLA stock, also pointed out Tesla’s willingness to do a capital raise this year. “Management also seemed less opposed to an equity capital raise, acknowledging “some merit” to the idea, which in our view serves to highlight dilution risk that likely rises after 1Q cash flow and cash balance tracked weaker than JPM and consensus expectations. While 2Q deliveries guidance appears potentially aggressive, the full year outlook for 360-400K implies a further roughly +35% to +45% sequential increase from 1H19 to 2H19, further highlighting the execution risk entailed in meeting the figures that are implied needed to generate positive earnings and cash flow,” he wrote.
Joseph Spak from RBC noted that Tesla’s Q1 numbers were “uglier than expected,” while stating that a capital raise will likely be held this year. Similar to Brinkman, Spak reiterated his “Underweight” rating and $200 price target for Tesla stock. “Elon talked about putting Tesla on a ‘Spartan diet’ and while we don’t doubt the company spent inefficiently in the past, the low capex+R&D and of course the lower sales, are not hallmarks of a hyper-growth company, yet TSLA continues to be valued as one,” he wrote.
Evercore ISI analyst Arndt Ellinghorst also proved bearish on the company, expressing his reservations about Tesla in a segment of CNBC‘s Street Signs. The analyst was skeptical of the demand for Tesla’s vehicles, even noting that the Model S sedan and the Model X SUV are already starting to look “quite old.” “If you claim that demand is huge and unlimited then the key question is, why do you lower your mix? Why do you lower your pricing? I mean the S and the X are quite advanced in any normal life cycle of a product so they would really need a significant refresh in order to restore the pricing. The brand will be less exclusive than it has been in the past,” the Evercore ISI analyst said.
Not all analysts covering the company were bearish after Tesla’s release of its first-quarter results. In a note, Piper Jaffray analyst Alexander Potter opted to look into the coming quarters for a potential recovery, while pointing out that Tesla’s shortcomings in Q1 were the result of several factors. “Although logistical challenges—long with lower transaction prices—had an obvious impact on Q1 profitability, we think this was temporary,” analyst Alexander Potter wrote in a note. “Guidance implies a second-half recovery for both deliveries and margins, and this seems reasonable to us. The first quarter suffered from a particularly nasty combination of headwinds, including seasonality, a big buildup of non-US deliveries (negative for logistics costs and working capital), as well as the expiration of tax incentives in the United States,” Potter wrote.
As of writing, Tesla is trading down -3.35% at $250.00 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
Tesla is ‘better-positioned’ as a company and as a stock as tariff situation escalates
Tesla is “better-positioned” as a company and as a stock as the tariff situation between the United States, Mexico, and Canada continues to escalate as President Donald Trump announced sanctions against those countries.
Analysts at Piper Sandler are unconcerned regarding Tesla’s position as a high-level stock holding as the tariff drama continues to unfold. This is mostly due to its reputation as a vehicle manufacturer in the domestic market, especially as it holds a distinct advantage of having some of the most American-made vehicles in the country.
Analysts at the firm, led by Alexander Potter, said Tesla is “one of the most defensive stocks” in the automotive sector as the tariff situation continues.
The defensive play comes from the nature of the stock, which should not be too impacted from a U.S. standpoint because of its focus on building vehicles and sourcing parts from manufacturers and companies based in the United States. Tesla has held the distinct title of having several of the most American-made cars, based on annual studies from Cars.com.
Its most recent study, released in June 2024, showed that the Model Y, Model S, and Model X are three of the top ten vehicles with the most U.S.-based manufacturing.
Tesla captures three spots in Cars.com’s American-Made Index, only U.S. manufacturer in list
The year prior, Tesla swept the top four spots of the study.
Piper Sandler analysts highlighted this point in a new note on Monday morning amidst increasing tension between the U.S. and Canada, as Mexico has already started to work with the Trump Administration on a solution:
“Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars.”
However, with that being said, there is certainly the potential for things to get tougher. The analysts believe that Tesla, while potentially impacted, will be in a better position than most companies because of their domestic position:
“If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America. [There is a possibility that] Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face).”
There is no evidence that Tesla will be completely bulletproof when it comes to these potential impacts. However, it is definitely better insulated than other companies.
Need accessories for your Tesla? Check out the Teslarati Marketplace:
- https://shop.teslarati.com/collections/tesla-cybertruck-accessories
- https://shop.teslarati.com/collections/tesla-model-y-accessories
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Tesla (NASDAQ: TSLA) received a price target boost from analysts at Truist Securities, but it came with some criticisms based on a lack of information on several things that investors were excited to hear about regarding future vehicles and AI achievements.
Last night, Tesla reported its earnings from the fourth quarter of 2024, and while it had a very tempered financial showing, missing most of the Wall Street targets that were set for it, the stock was up after hours and on Thursday due to the details the company released regarding its plans for 2025.
CEO Elon Musk stunned listeners last night by revealing plans to launch unsupervised Full Self-Driving as a service in Austin in June 2025. It will be the first time Tesla will offer driverless FSD rides in public, something it has been working with the City of Austin on since December.
Tesla to launch unsupervised Full Self-Driving as a service in Austin in June
It also reiterated plans for affordable models to be launched this year, potentially catalyzing annual growth in deliveries, something it said it expects to resume in 2025.
Tesla was flat on deliveries in 2024 compared to 2023.
The positives during the call were enough for Truist Securities analyst William Stein to raise the company’s price target to $373 from $351. However, Stein’s note to investors showed there was something to be desired despite all the good that was revealed during the call:
Stein said there was “not enough ground-truth” during the call and too much of a focus on “cheerleading” the company’s potential releases this year:
“Too much cheerleading; not enough ground-truth. In Q4, TSLA’s ASP weakness drive revenue, GPM, OPM, & EPS below consensus.”
As previously mentioned, Tesla did report weak financials that missed consensus estimates. What saved the call and perhaps the stock from plummeting on these missed metrics was the other details that Musk revealed, especially the FSD launch in Austin in June.
There were also plenty of things related to the affordable models and other vehicles, like the fact that Tesla plans to include things like Steer by Wire, Adaptive Air Suspension, and Rear Wheel Steering, that helped offset negatives.
Stein saw this as a distraction from what should have been reported:
“While CEO Elon Musk played the role of cheerleader, calling for TSLA’s path to massive market cap by leading in autonomy, management was remarkably short on two critical details: (1) info about new vehicles in 2025 and (2) milestones for AI acheivements, especially FSD. We continue to ask ourselves ‘where’s the beef?’ CY26 EPS to $3.99 (from $4.87). DCF-derived PT to $373 (from $351).”
Tesla did detail some AI milestones, like its record-breaking miles per accident on Autopilot, which was a Q4-best of 5.94 million miles. The Shareholder Deck also outlined major upgrades to AI:
“In Q4, we completed the deployment of Cortex, a ~50k H100 training cluster at Gigafactory Texas. Cortex helped enable V13 of FSD (Supervised)1, which boasts major improvements in safety and comfort thanks to 4.2x increase in data, higher resolution video inputs, 2x reduction in photon-to-control latency and redesigned controller, among other enhancements.”
Tesla shares are up 2.11 percent on Thursday as of 12:05 p.m. on the East Coast.
Need accessories for your Tesla? Check out the Teslarati Marketplace:
- https://shop.teslarati.com/collections/tesla-cybertruck-accessories
- https://shop.teslarati.com/collections/tesla-model-y-accessories
- https://shop.teslarati.com/collections/tesla-model-3-accessories
Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.
Tesla has released its Q4 2024 vehicle safety report. Similar to data from previous quarters, vehicles that were operating with Autopilot technology proved notably safer.
The Q4 2024 report:
- As per Tesla, it recorded one crash for every 5.94 million miles driven in which drivers were using Autopilot technology.
- The company also recorded one crash for every 1.08 million miles driven for drivers who were not using Autopilot technology.
- For comparison, the most recent data available from the NHTSA and FHWA (from 2023) showed that there was one automobile crash every 702,000 miles in the United States.
Previous safety reports:
- In Q3 2024, Tesla recorded one crash for every 7.08 million miles driven in which drivers were using Autopilot technology and one crash for every 1.29 million miles driven by drivers not using Autopilot technology.
- In Q2 2024, Tesla recorded one crash for every 6.88 million miles driven in which drivers were using Autopilot technology, and one crash for every 1.45 million miles driven for drivers not using Autopilot technology.
- In Q1 2024, Tesla recorded one crash for every 7.63 million miles driven in which drivers were using Autopilot technology, and one crash for every 955,000 million miles driven for drivers not using Autopilot technology.
Year-over-Year Comparison:
- In Q4 2023, Tesla recorded one crash for every 5.39 million miles driven in which drivers were using Autopilot technology and one crash for every 1.00 million miles driven for drivers not using Autopilot technology.
Key background:
- Tesla began voluntarily releasing quarterly safety reports in October 2018 to provide critical safety information about our vehicles to the public.
- On July 2019, Tesla started voluntarily releasing annual updated data about vehicle fires as well.
- It should be noted that accident rates among all vehicles on the road can vary from quarter to quarter and can be affected by seasonality, such as reduced daylight and inclement weather conditions.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
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