March 28, 2024

Analyst Toni Sacconaghi from Bernstein Research has recently shifted into a bearish stance on Tesla (TSLA), the electric vehicle behemoth, reflecting challenging financial conditions. Reducing the stock price target from $150 to a more prudent $120 per share suggests an expected additional 33% drop in Tesla’s stock value within the next year. Despite this gloomy anticipation set against the year’s commencement marked by a 27% stock depreciation, Tesla’s stock witnessed a minor rebound, potentially owing to CEO Elon Musk’s efforts to emphasize the firm’s autonomous driving advancements, chiefly its Full Self Driving (FSD) software.

Sacconaghi’s downgrade comes as Tesla’s stock stood at $172.63, implying a prospective 30.49% plunge to the new target of $120. This shift signifies critical reassessment of Tesla’s market standing and future growth, underlined by the stock’s modest 2.92% rise post-announcement. Over the past year, Tesla’s stock fluctuations, within $152.37 to $299.29, underscore investor eagerness and price volatility within this EV market leader.

Sacconaghi’s concerns stretch beyond mere stock price revisions. He slashed first-quarter delivery estimates dramatically from 490,000 to 426,000 units, barely pushing past the almost 423,000 vehicles delivered during 2023’s first quarter. This suggests a potential tapering off in Tesla’s unit sales expansion, key to both revenue and valuation. Moreover, the 2024 full-year delivery prediction has been downgraded below 2 million units from an initial 2.1 million, stemming from “soft” demand in primary markets such as China and Europe, compounded by “constrained” Model 3 production stateside.

In light of these hurdles, Musk’s plan to spotlight Tesla’s tech innovations, predominantly the FSD software, might mitigate the bearish perspective. Musk’s proposal to provide a complimentary month of FSD, typically valued at $199 per month, is aimed at showcasing Tesla’s autonomous driving tech capabilities, possibly bolstering FSD adaptation and influencing the company’s stock performance constructively.

In summary, Tesla’s financial trajectory is marked by analyst apprehension and persistent market instability. Tesla’s altered delivery projections and an emphasis on FSD tech underline the firm’s looming challenges and opportunities. As Tesla navigates limited demand in core markets and production constraints, adapting its autonomous driving technology might be critical in sculpting its financial outlook.