Tesla (NASDAQ:TSLA) investors haven’t had much to cheer about since the turn of the year, with shares declining by 28%. As the first quarter nears its end, could the electric vehicle powerhouse be gearing up for a positive turnaround?
According to Oppenheimer’s Colin Rusch, a 5-star analyst rated in the top 1% of the Street’s stock pros, recent actions by Tesla suggest this possibility may be on the horizon.
“With TSLA announcing planned price increases across geographies and reports surfacing about moderated production in China, we believe the company is working to deliver as many vehicles as possible before quarter end and managing supply/ demand balance as it shifts focus toward maximizing value capture per vehicle away from unit growth,” Rusch opined.
Next month, the company intends to increase its Model Y prices across all major sales regions, and with that in mind, Rusch believes “many potential buyers have closely watched pricing dynamics looking for lower prices before buying.” That could help March quarter sales get a lift.
At the same time, Rusch thinks the company is leveraging the production interruptions in Berlin this quarter and “moderating Shanghai utilization” to keep inventory levels low by the quarter’s end. Furthermore, Rusch thinks there’s potential for the company to fine-tune production to “optimize feature sets” aimed at underserved regions and restrict the availability of low-end models to stimulate demand for the Model 2.
Talking of the Model 2, Tesla’s lower priced vehicle is set to enter production next year. With the company ramping up FSD (full self-driving) development post substantial investments in computing capabilities and the wider roll-out of V12 FSD, thereby enabling faster system training through real-world data, Rusch thinks that as Tesla readies for the release of the Model 2, the company is “setting the stage for increased software driven revenue growth.”
Rusch also anticipates that the broader rollout of FSD v.12.3 will expedite the collection of training data and “trigger incremental deferred revenue recognition” in 1Q24. However, the timing for consistent recognition of software/AI revenue “remains uncertain.”
While Rusch has trimmed some delivery forecasts, lowering Q1 expectations to 468,000 (from 509,000) and FY24 expectations to 2.13 million (from 2.17 million), he thinks the 1Q24 report could lead to a “final near-term cut” on TSLA estimates.
Meanwhile, Rusch remains on the sidelines, giving Tesla shares a Perform rating (i.e., Neutral) without offering a fixed price target. (To watch Rusch’s track record, click here)
Others on the Street do have a price target in mind, and the average stands at $207.74, implying shares will gain ~17% over the coming months. Rating wise, based on a mix of 10 Buy recommendations, 18 Holds and 6 Sells, the analyst consensus rates the shares a Hold. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
