US equity future are flat today but Tesla will be a drag. They’re trading lower by 2.5% in the pre-market and threatening yesterday’s low after a downgrade from Wells Fargo.
They expect sales “to disappoint as [price] cuts are having a diminishing impact on demand. .. In the wake of price cuts are lower lease residuals, disgruntled customers & the possible loss of the luxury brand premium.”
They lowered their target to $125 from $200 and cut shares to underweight. In a downside scenario, they see shares as low as $44.
“We see downside risk to volume as price cuts are having a diminishing impact. We see headwinds from disappointing deliveries & more price cuts, which likely drive negative EPS revisions. Our 2024 & 2025 EPS estimates are 32% & 52% below consensus, respectively. Model 2 economics are likely tough as a mass market compact vehicle.”
They see 1.8 million deliveries in 2024, which is nearly flat with 2023 and little sales growth in 2025. They see an earnings decline this year to $2 from an adjusted $3.12 in 2023 and called it “a growth company with no growth”.
Earlier this week, Evercore questioned whether Tesla could ramp up production of the Model 2 for 2026, where the consensus is seeing 1 million in sales. The report said Tesla is increasingly a 2027 story after touring the Texas factory.
On the TSLA chart, a series of lower lows is increasingly seen and with shares trading at $173 in the pre-market, yesterday’s low is at risk.
TSLA daily
Today Elon Musk travelled to Berlin to visit the factor there a week after a suspected arson attack. The plant was restarted yesterday and today