The Bears are out for it Tesla (NASDAQ: TSLA) Recently with concerns about weak demand and ever-increasing competition.
But if these arguments sound familiar, that's because they are. Looking ahead to the first months of 2023, Wedbush analyst Daniel Ives, a 5-star rated analyst who ranks in the top 2% of Wall Street stock experts, reminds us that the prevailing bearish narrative for Tesla at the beginning of the year revolved around the belief that “ “Demand is eroding and competition is increasing in all areas.”
“Instead, Musk has taken a poker move for the ages and cut prices globally with China front and center to stimulate volumes/units that should now impressively be in the 1.8 million range by 2023,” says Ives.
However, reaching these volumes came at a cost, as the company's profit margin took a hit. But as we head towards 2024, this remains a “major hot-button issue” for investors, and Ives believes the problem is abating. “To this point, we believe margins have now stabilized and should rise from these levels as Auto GM returns above the key 20% threshold during 2024,” he says.
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 is now raising prices and seeing “steady demand” in this key region, and Ives expects Tesla's sales volumes in China for the fourth quarter to reach “another record.”
For 2024, Ives believes units in the range of 2.2 million to 2.3 million — or up to 25%-30% year-over-year unit growth — are “very achievable.” Buoyed by Model Y sales in China and Europe, there's likely an upside to this.
Looking further, while true global demand for electric vehicles has “clearly moderated,” it is also worth noting that this huge shift in the auto industry is still in its early days, with Ives estimating that by 2030, it will be around 20%. % of cars are electric. 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 that was once led by an outspoken CEO.
“Tesla’s ‘Golden Vision’ is now monetizing its supercharging network with batteries and AI/FSD which then adds to Tesla’s sum-of-the-parts story,” Ives summarized. “We're looking at Tesla where Apple was in 2008/2009 as Cupertino was just starting to monetize its services and gold ecosystem with the Street not seeing the broader gold vision at the time.”
With all this said, Ives believes a new target price is due; As such, his target moves from $310 to $350, suggesting that shares have room for one-year growth of approximately 41%. Ives rating remains Outperform (i.e. Buy). (To watch Ives' record, click here)
However, not everyone is quite so optimistic; The Street's average target of $243.59 factors in shares remaining in a tight range at the moment. In terms of rating, based on 12 Buys, 13 Holds, and 5 Sells, the stock gets a Moderate Buy consensus rating. (be seen Tesla stock forecast)
To find good stock trading ideas at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
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.
“Web maven. Infuriatingly humble beer geek. Bacon fanatic. Typical creator. Music expert.”