Tesla, Inc. (NASDAQ: TSLA) shares fell sharply Monday and pulled back below the $180 level, dragged by a few catalysts, including a downward price target revision by Piper Sandler.
The Tesla Analyst: Piper Sandler analyst Alexander Potter maintained an Overweight rating and reduced the price target from $295 to $225. Incidentally, the stock is trading well below even the reduced price target.
The Tesla Takeaways: Potter lowered his 2024 volume estimate for Tesla from 2.18 million units to 1.93 million units, marking a 7% year-over-year increase. Most of the upside will likely come from the "rest of the world" regions and the Cybertruck, he said with the former accounting for 80,000 of the incremental volume and the latter 31,000 units, the analyst said.
Tesla may have to cut prices further due to its "aging" product lineup, Potter said. Tesla's automotive gross margin, excluding regulatory credits, will likely fall by 110 basis points year-over-year to 16.6%, he added.
"We think TSLA erred in prioritizing Cybertruck over a cheaper vehicle with wider appeal," Potter said, adding that a $25,000 vehicle won't debut before the fourth quarter of 2025. As such, the analyst sees delivery growth slowing in 2024 and 2025.
Tesla's recent spending increases, the analyst said, are toward long-term bets on AI, neural net training etc.
Despite the near-term skepticism, the analyst is positive regarding the long term. "While these changes are leading us to reduce our 1-year price target, we are no less bullish on Tesla's multi-year prospects," he said.
The analyst also recommended that investors should educate themselves on the company's non-automotive segments, starting with Tesla Energy. He backed his bullish call by noting that many bulls own Tesla for its non-automotive opportunities. "Non-automotive catalysts can (and often do) emerge, driving sudden multiple expansion," he said.
TSLA Price Action: At last check, Tesla stock was down 4.42% to $179.60, according to Benzinga Pro data.