Wedbush's Dan Ives on Q1 Deliveries Tesla (TSLA): 'Could Be Turning Point in Story If Musk Does Not Reverse Trend'
Wedbush analyst Daniel Ives reiterated an Outperform rating and $300.00 price target on Tesla (NASDAQ: TSLA)
The analyst comments "Disaster 1Q; Could Be Turning Point in Story If Musk Does Not Reverse Trend. Tesla announced its 1Q deliveries this morning which negatively shocked the Street coming in at 386.8k vehicles vs. Street's expectations of ~443k with whisper expectations in the 415k range. Model 3/Y deliveries were 369.7k in the quarter as the company claims volume declines were partially due to early phases of the production ramp of the updated Model 3 and factory shutdowns from the Red Sea conflict/Berlin shutdown. Production came in at 412.4k, below the 432.6k Street estimate following the Berlin two-week shutdown following its fire pointing to continued strong inventory controls. Let's call this as it is: While we were anticipating a bad 1Q, this was an unmitigated disaster 1Q that is hard to explain away. We view this as a seminal moment in the Tesla story for Musk to either turn this around and reverse the black eye 1Q performance. Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative. While we remain bullish on the long term story given the prospects for growth and EV/FSD over the coming quarters, this was a train wreck into a brick wall quarter for Musk & Co. with our estimate that China was down at least 3% YoY. 1Q deliveries was a nightmare quarter for Tesla with Elon pressured by the Street and China demand remaining very soft coming out of the gates for 2024. While supply issues (factory planned downtimes/Berlin fire) has impacted supply, there is no denying this has been a quarter to forget for Musk and Tesla. That said, while Tesla right now is caught between "two waves of growth" patience is starting to wear very thin among investors. This is being exacerbated by the Musk AI outside of Tesla chatter, Board issues, Delaware Musk comp void, and now a likely move to incorporate in Texas. With this quarter and unlike other times, Street criticism is warranted as growth has been sluggish and margins showing compression with China a horror show and competition increasing from all angles. For Musk, this is a fork in the road time to get Tesla through this turbulent period otherwise troubling days could be ahead. With the ongoing debacle around margins, production and ongoing macro events, Musk will need to quickly take the reins back in to regain confidence in the eyes of the Street with a big few quarters ahead. We maintain our OUTPERFORM rating."
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Shares of Tesla closed at $175.22 yesterday.