Tesla (NASDAQ:) stock remains one of the worst performers among mega-cap stocks, taking another hit after reporting underwhelming first-quarter delivery results earlier this week. In response, Morgan Stanley analysts lowered their price targets on the stock, but remain bullish on the electric vehicle maker's long-term prospects.
Tesla stock slumps after first quarter deliveries
Tesla stock took a hit on Tuesday after the company announced lower vehicle deliveries for the first quarter of 2024, marking its first year-over-year decline since the pandemic slowed production in 2020.
TSLA closed nearly 5% lower.
The EV leader announced that it delivered a total of 386,810 vehicles and produced 433,371 vehicles in the first quarter of 2024. This corresponds to a modest decrease of 1.7% year-on-year and a significant decrease of 12.5% quarter-on-quarter. The delivery rate was even more impressive at 8.5% year over year.
Tesla does not disclose sales numbers for individual models, but it says that Model 3/Y was produced at 412,376 units, of which 369,783 units were delivered, while for other models, 20,995 units were produced and 17,027 units were delivered. Reporting.
For comparison, Tesla's numbers for the same period last year were even higher, with deliveries of 422,875 vehicles and production of 440,808 vehicles. In the fourth quarter of 2023, activity was even more intense with production of 484,507 units and production of 494,989 units.
Tesla stock rebounded slightly in Wednesday trading, but the EV maker remains in an overall downtrend amid a combination of headwinds.
Weak earnings reports and profitability metrics, in part due to Tesla's aggressive price cuts throughout last year, as well as weak demand across the EV market, have contributed to the company's stock decline of 32% since the beginning of the year.
Morgan Stanley lowers TSLA target, remains positive
Morgan Stanley analysts lowered their price target from $320 to $310 after Tesla's poor first-quarter delivery performance.
“Tesla's poor first-quarter results clearly indicate that the EV 'weedout' phase is underway,” analysts said.
However, the Wall Street giant maintained an overweight rating on Tesla stock, highlighting the company's “key attributes that make it a valued beneficiary of AI.”
Still, the company notes that it first needs to address and stabilize the negative trend in earnings revisions within its auto division.
“I don't think Tesla can be trusted as an AI company as long as core auto earnings are revised downward. This process could take several more quarters to complete, but in the meantime, our $100. Bearish litigation could become 'ongoing','' the Morgan Stanley team said.
The bank maintains its view that Tesla is not only a car company but also an important player in the energy, AI and robotics sectors.
According to their analysis, the $62 per share valuation for Tesla's core auto business is only about 20% of the company's $310 price target.
Analysts acknowledge the importance of global EV market trends and say that negative trends “naturally have a negative short-term impact” on Tesla stock.
Nevertheless, they ignore Tesla's other businesses, including those related to the auto sector, such as potential recurring revenue from the fleet of vehicles that investors account for in the valuation of Tesla Network Services. I don't think it should be done.
Additionally, there are additional elements not included in the $310 target, such as the Optimus project, which will be further disclosed at Tesla AI Day in 2024, analysts said.
Morgan Stanley expects Tesla's results to bottom out by second-quarter earnings, “well before the model cycle significantly rejuvenates.”
