It’s almost crunch time for Tesla (NASDAQ:TSLA). Once the bell rings to bring tomorrow’s (Wednesday, January 24) market action to a close, the EV leader will deliver its Q4 print.
More than anything, Wedbush’s Daniel Ives, a 5-star analyst rated in the top 2% of the Street’s stock pros, believes investors will be keen to see which of two paths the company decides to head down in 2024.
“After a very strong 2023 in which price cuts from Tesla was the right poker move that enabled healthy demand in China and globally now Musk and Tesla faces a key strategic decision ahead: Keep cutting prices with a glut of EVs and competition flooding the industry….or hold serve and maintain price and margin stability for 2024 through this softer EV demand storm. Which pricing path Tesla takes will be a foundational move for the future of Tesla over the coming years in our view,” the top analyst opined.
The results will come accompanied by the all-important outlook for the year with Ives noting the Street is expecting the company to guide for 2.1 million to 2.2 million units in 2024, amounting to growth of ~20%.
Auto GMs (gross margins – ex credit), the other important metric investors will be keeping a close eye on, hit 16.3% in Q3, and Ives reckons they should head toward 17% in Q4. In fact, the margin profile is probably the big issue here and Ives concedes that if the company indicates more price cuts are coming (Ives’ view is that most have already taken place), that could further depress sentiment as the result will be a further contraction of margins and that would make it hard for the stock to “shed this black cloud in the near-term.”
Recall, the Q3 conference call was a bit of a disaster and featured portentous warnings from CEO Elon Musk on the difficult path ahead. Ives thinks it’s crucial the company offers a more upbeat take on the Q4 call.
“The line in the sand around margins must be drawn tomorrow to give investors the hittable bogeys and targets for 2024 and then start the next phase of the Tesla growth story through this near term period of supply glut and uncertainty for EVs,” he summed up.
All in, Ives maintained an Outperform (i.e., Buy) rating on Tesla shares, along with a $350 price target, implying shares will surge ~67% in the year ahead. (To watch Ives’ track record, click here)
Most on the Street, however, are not quite as confident; the ratings breakdown into 9 Buys, 10 Holds and 4 Sells, all coalescing to a Hold consensus rating. That said, at $248, the average target implies shares will climb 18% higher over the one-year timeframe. (See Tesla stock forecast)
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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.
