2024-03-07 05:04:03
Will Tesla lose money this year?! Massive price target (ASSOCIATED PRESS)
Morgan Stanley’s Adam Jonas is the latest analyst to raise concerns regarding Tesla (TSLA). In a note to clients, Jonas wondered, “Will Tesla lose money (sometime) this year?”
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Jonas lowered his price target to $320 from $345 (still one of the most optimistic targets on Wall Street), citing concerns that price cuts will not improve weak demand for electric vehicles and that fleet operators such as Hertz will reduce the price of their electric vehicles. Dumping and the “strong trend of hybrid vehicles” have caused people with a wait-and-see attitude to abandon electric vehicles.
Jonas said that if Tesla’s automotive business is likely to experience a loss in earnings before interest and tax (EBIT), it may be in 2024. Tesla shares responded by closing lower for a third straight day.
Morgan Stanley’s main concerns are the “relative aging” of its products, slowing demand for electric vehicles in major markets, oversupply in the Chinese market and the resurgence of hybrids.
While Tesla is cutting prices, its main competitor BYD has also lowered the prices of its entry-level Seagull and Yuan Plus crossovers just this week. The situation in the Chinese market is worth noting. “Price competition is expected to persist in 2024 and will spur OEMs (in China) to further cut costs,” Jonas wrote.
These factors led Morgan Stanley to lower its expectations for Tesla’s key indicators:
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Sales volume will drop below 2 million units in 2024, an increase of regarding 10% year-on-year
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GAAP operating margin fell to 3.7% from 5.9% forecast in 2024
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2024 GAAP EPS is revised down to $0.99 from $1.54 previously; non-GAAP EPS is revised down to $1.51 from $2.04 previously
Jonas’ new price target is lowered by $5 due to slower revenue growth, $10 lower due to lower margins, and lower due to slower growth in Tesla’s mobility initiatives such as ride-sharing and autonomous driving. 10 USD.
Still, Jonas calls for an “overweight” in Tesla stock due to investments in other non-electric vehicle products.
“Our view of Tesla is that it is both an auto stock and an energy, artificial intelligence/robotics company,” Jonas said. “We believe investors should not ignore the continued development of Tesla’s other businesses, many of which are automotive-related (i.e., potential recurring revenue from Tesla’s fleet—which is included in Tesla’s Internet Services valuation), and there are areas that we have not considered, and A price target of $320 is calculated, but the market may take it into account (like Optimus).”
AI company OpenAI claimed on Tuesday that Musk had tried to merge OpenAI with Tesla, which would create an AI giant. Musk was an early investor in OpenAI but eventually sued the company, accusing OpenAI of prioritizing profits over creating public good.
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