Analyst says Cybertruck cancellation will be a ‘positive’ for Tesla stock

and Tesla (TeslaWith initial deliveries of electric trucks set to begin at the end of this month, the EV giant would be better off shelving the highly anticipated vehicle, an analyst wrote on Monday. Tesla shares were slightly higher in early trading on Tuesday after rising on Monday.


Jefferies analyst Philippe Houchois lowered his price target on Tesla to 210 from 250, while maintaining a hold rating on the stock. The analyst then made some comments about the Cybertruck.

“Although cancellation of the Cybertruck days before first delivery is unlikely, cancellation of the Cybertruck could have a positive impact on the stock price,” Houchois wrote on Monday. “With 2024 already being a lost year for growth, “This will help Tesla refocus on its strengths built on simplicity, scale,” and speed. “

Tesla shares rose about 0.2% in pre-market trading on Tuesday. Tesla shares fell in early trading on Monday before rising 0.6% to 235.60 during market actionTesla’s stock price has risen nearly 17% in November, ahead of Cybertruck deliveries scheduled to begin on November 30.

Third quarter sparks pessimism for Tesla

On October 18, Tesla’s stock price fell after it reported that its third-quarter profit and revenue were lower than expected. Tesla reported a 37% drop in third-quarter profit to 66 cents per share, its lowest level in two years under Chief Executive Elon Musk.

Meanwhile, quarterly revenue grew 9% to $23.35 billion. Tesla’s automotive gross margin, excluding regulatory credits, fell to 16.3%. Automotive gross profit margin (excluding regulatory credit and leasing) was 18.1% in the second quarter, down from 19% in the first quarter and below Tesla’s previously set “lower limit” gross profit margin target of 20%.

Elon Musk also preached caution on the earnings call, warning investors about the upcoming Cybertruck launch and the broader economy. The next day, Tesla shares fell 9.3%. Tesla did announce that initial Cybertruck deliveries would begin on November 30, but Musk said it would take 12-18 months for the new vehicle to become a “significant positive cash flow contributor.”

“I just want to lower my expectations for Cybertruck,” Musk told investors During the third-quarter earnings callMusk said that achieving mass production of Cybertruck will face “huge challenges.” He added that Tesla will eventually produce about 250,000 Cybertrucks per year. Musk said his best guess is that Tesla will reach this production volume sometime in 2025.

On November 6, Morgan Stanley analyst Adam Jonas wrote that investors should look for factors that indicate Tesla’s stock price has stopped declining.

Jonas said Tesla must stop missing consensus earnings per share forecast revisions while successfully launching new vehicles including, but not limited to, the Cybertruck. The Morgan Stanley analyst added that Tesla must demonstrate that its business model targets software and other products “beyond relevance” to the automotive market. “

“The bar for Cybertruck has been lowered significantly,” Jonas wrote. “While we still believe the model is relatively insignificant in the grander scope of Tesla’s future portfolio, we wouldn’t underestimate the impact of launch/ramp execution on sentiment.” .”

The Cybertruck will be the electric car maker’s first new passenger vehicle since the launch of the Model Y in early 2020.

Tesla sets record fourth-quarter target

At the same time, Tesla hopes to achieve its goal of delivering 1.8 million vehicles in 2023. Seven weeks into the fourth quarter, Tesla China insurance registrations, a rough indicator of vehicle deliveries, totaled 71,800 vehicles in the quarter, down about 2% year-over-year in the third quarter.

With the first batch of Cybertrucks launched at the end of November, Tesla launched the new Model 3 in China on September 1 and officially started sales on October 19. Tesla began delivering Model 3 on October 26. The global electric vehicle giant also launched a slightly updated Model Y in China in early October.

As of the end of the third quarter, Tesla’s full-year global deliveries were about 1.3 million vehicles, which means the company needs to deliver 480,000 vehicles in the fourth quarter to reach 1.8 million vehicles. This is 3% higher than the record 466,000 vehicles delivered in the second quarter. Tesla reiterated its vehicle delivery target of 1.8 million vehicles in its third-quarter earnings.

However, analyst forecasts have declined since October 18. Wall Street consensus sees Tesla’s vehicle deliveries in 2023 totaling 1.79 million vehicles, slightly below the 1.8 million target, according to FactSet. Meanwhile, Wall Street now expects fourth-quarter vehicle deliveries of 473,000 vehicles.

Analysts’ average 2023 earnings per share estimate has also fallen 7% since the third-quarter earnings report. Wall Street expects earnings per share in 2024 to be lower than in 2022, with analysts expecting earnings of $3.87 per share, down 14% from the $4.50 estimate before the third-quarter earnings report.

Cybertruck and Tesla Stock

Tesla shares have soared about 90% in 2023, sharply outperforming the broader S&P 500, as investors bet the electric car maker’s growth story remains intact despite recent growth woes. double bottom base Give it 278.98 buy someaccording to Market Smith Analysis.

Tesla stock ranks No. 6 among 35 stocks IBD Automotive Industry GroupThere are 90 constituent stocks in the S&P 500 Overall rating Best 99 points.Tesla stock also has 89 points relative strength rating and an 88 EPS Rating.

Follow Kit Norton on X (formerly Twitter), @kitnorton for more coverage.

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