Tesla Inc's
Fork In The Road: Tesla posted its first year-over-year decline in deliveries since 2020 on Tuesday, which sparked a selloff in shares. The EV maker said the decline in volumes was partially due to the production ramp of the updated Model 3, as well as factory shutdowns resulting from the Red Sea conflict and an arson attack at its German gigafactory.
In a new note to clients, Wedbush analyst Dan Ives called Tesla's first-quarter deliveries print an "unmitigated disaster" that's "hard to explain."
"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," Ives said in the note.
"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."
Ives estimated that China sales were down at least 3% on a year-over-year basis as competition continues to grow in the region. The Wedbush analyst went on to say China is a "horror show" for margin compression and called the EV maker's overall performance a "nightmare quarter."
"With this quarter and unlike other times, Street criticism is warranted," Ives said. "For Musk, this is a fork in the road time to get Tesla through this turbulent period otherwise troubling days could be ahead."
Despite the negative commentary surrounding the first-quarter surprise, Ives remains bullish on Tesla longer term. The analyst maintained an Outperform rating on the stock and still has a 12-month price target of $300.
Deepwater Asset Management's Gene Munster expressed similar views to Ives in an initial reaction to the delivery numbers posted on X.
Munster attributed the "ugly" numbers to a combination of high interest rates and less excitement surrounding EVs in general. The analyst now expects Street delivery estimates to come down for the remainder of the year. Current estimates are looking for 19% year-over-year growth, but he expects growth to be closer to 10%.
Although downward revisions are likely to further pressure Tesla shares, comps get easier in 2025 and 20% growth looks reasonable, according to the Deepwater analyst.
"I still believe $TSLA is on the right track and this storm will pass. EVs are a better way to move a car and autonomy is a better way to get around. Tesla is investing in that future while other car makers are slowing their investment," Munster said.
TSLA Price Action: Tesla shares are down about 33% year-to-date. The stock was down 5.37% at $165.74 at the time of publication, according to Benzinga Pro.
