Equities

Tesla Stock Declines Amid Missed Q1 Delivery Estimates and Analyst Forecasts

Analyst sees 79% upside for Tesla despite a 14.5% year-long slump and recent delivery shortfalls, highlighting growth in FSD and energy storage.

By Bill Bullington

4/3, 19:21 EDT
Tesla, Inc.
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Key Takeaway

  • Tesla Inc. sees a 14.5% year-on-year stock decline and misses Q1 vehicle delivery estimates, impacting shares negatively.
  • RBC Capital Markets forecasts a 79% upside for Tesla, citing growth in full self-driving and energy storage sectors.
  • Ark Invest buys over $39 million in Tesla shares despite challenges, including production issues and increased competition.

Tesla's Recent Performance

Tesla Inc. has experienced a notable downturn in its stock value, with a 14.5% plunge over the last 12 months and a significant 6.5% drop following its first-quarter vehicle production and delivery report for 2024. The electric vehicle (EV) giant reported delivering 386,810 vehicles in the January to March quarter, falling short of the roughly 457,000 vehicles analysts had anticipated. This marked an 8.5% decrease from the year-ago quarter and about a 20% drop from the fourth quarter of 2023. Despite these challenges, some analysts, including Tom Narayan from RBC Capital Markets, remain optimistic about Tesla's long-term prospects, citing opportunities in full self-driving (FSD) products and energy storage as key growth areas. RBC Capital Markets maintains an outperform rating on Tesla with a target price of $298, suggesting close to a 79% potential upside.

Strategic Responses and Market Reactions

In response to the recent stock price decline, Ark Invest, led by CEO Cathie Wood, has purchased over $39 million in Tesla shares, signaling strong confidence in the company's future. This move comes amidst Tesla facing increased competition, particularly in China, and a general slowdown in EV demand. Despite a 33% year-to-date stock drop, analysts like Narayan highlight Tesla's potential in energy storage and autonomous driving technologies as reasons for optimism. The investment community remains divided, with FactSet data showing that out of 51 analysts covering Tesla, 17 give the stock a buy or overweight rating, while 24 have a hold rating, and 10 have a sell or underweight rating, with an average price target of $198.87.

Challenges and External Factors

Tesla's first-quarter performance was impacted by several external factors, including production ramp issues with the updated Model 3, factory shutdowns due to the Red Sea conflict and an arson attack at Gigafactory Berlin, and stiff competition in China from domestic EV makers. Additionally, mixed reviews in the U.S. for its newly released Cybertruck and a series of discounts and incentives have been less effective in driving sales volume than in the past. Despite these hurdles, Tesla continues to focus on innovation, particularly in developing its FSD system, which remains a key factor in its long-term growth strategy.

Street Views

  • Tom Narayan, RBC Capital Markets (Bullish on Tesla):

    "The stock, despite this performance today, is only down like 4.5%, which makes me think that expectations are already really low... FSD is an incredible product... Bigger than everything else, most of my valuation is on things like energy storage, something nobody’s talking about as huge opportunity for them. And also autonomy — If FSD works. Now it’s a software business with the software multiple."