After 2020’s humongous share gains, 2021 is proving a bit of a come down for Tesla (TSLA), with shares sitting 7% into negative territory, a disappointing showing compared to the S&P 500’s 16% uptick.
Wedbush’ Daniel Ives puts the weak performance down to a trifecta of: “1) increasing EV competition, 2) China PR/safety issues negatively impacting demand, and 3) the chip shortage overhang.”
Ives thinks these issues will be the ones Wall Street will mainly focus on when the company reports Q2 earnings next Monday (July 26 AMC).
Nevertheless, despite these issues, Tesla still managed to deliver more than 200,000 units in the June quarter, an “impressive” feat and one which Ives thinks keeps the company on track to “possibly” hit 900,000 for the year with the prospect of a “stronger 2H on the horizon.”
Looking further ahead, Ives thinks that with next year’s addition of the Cybertruck, Tesla can “track towards” 1.3 million deliveries in 2022.
That said, as Ives notes above, part of the downbeat sentiment around Tesla has been due to a constant stream of negative PR/safety headlines from the key Chinese region, while at the same time, competition in the EV segment is only increasing. As for the former, while Ives describes the China issues as “bumpy,” the analyst thinks the way Musk and Co. have navigated them has been “better than expected,” putting the company in a position to “accelerate market share in this key region over the next 6 to 12 months.”
And as for the latter, while competition in this “EV arms race” is intensifying, the march toward an electric future which will change the auto industry forever, is only just beginning. As such, Ives thinks Tesla is still the company to lead the charge.
“We believe the EV market opportunity and green tidal wave will translate into a $5 trillion market over the next decade with Tesla a disproportional beneficiary of this broader consumer adoption towards EVs and autonomous over the coming years,” the analyst confidently wrapped up.
All in all, then, there’s no change to Ives’ rating, which stays an Outperform (i.e., Buy), or price target, which remains at $1,000. Investors are looking at 12-month returns of ~55% from current levels. (To watch Ives’ track record, click here)
Overall, Tesla has mixed reviews with 10 analysts recommending to Buy, 6 to Hold and 7 suggesting to Sell, culminating in a Hold consensus rating. The $658.27 average price target implies shares will stay rangebound for the foreseeable future. (See TSLA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
