Last week, the Tesla stock (NASDAQ: TSLA) price went up by over 8 percent, reversing a bearish trend that had seen its value dropping to a two-year price low. However, despite last week’s price growth, concerns still remain about the prospects of Tesla’s recovery.
Tesla, the electric vehicle giant, has seen its stock price decline significantly in recent months amid production disruptions, concerns over slowing demand, and CEO Elon Musk’s focus on newly acquired Twitter. The company’s fourth-quarter delivery figures, which were released on New Year’s Day, also added to investors’ concerns. Tesla reported that its fourth-quarter deliveries rose 18% sequentially to 405,000, missing consensus forecasts of 418,000. This is despite the company’s total deliveries for 2022 reaching 1.3 million units, a 40% year-over-year increase but below the company’s guidance of 50%.
The delivery miss sparked further concern on Wall Street about the demand for Tesla’s vehicles. JPMorgan analyst Ryan Brinkman, for instance, cut his profit estimates and price target for the company in response to the weak results and maintained an “underweight” (sell equivalent) rating on the stock. Brinkman indicated that he also expected Tesla to miss fourth-quarter earnings estimates of $1.19 per share when it reports later in January and has lowered his 2023 earnings estimate for the company to $4.60 per share from $4.84 previously.
In addition to the delivery miss, Tesla has also faced “significant Covid and supply chain related challenges throughout the year,” according to a statement to investors. The company was reportedly fined $2.2 million by authorities in South Korea for failing to inform customers about the shorter driving range of its electric vehicles in low temperatures and for exaggerating the performance of its Superchargers and the fuel cost-effectiveness of its vehicles compared to gasoline vehicles.
Despite the challenges, some analysts see potential buying opportunities in Tesla’s stock. Analysts at Goldman Sachs view the delivery report as an “incremental negative” but maintain a “buy” rating on the stock, stating that making vehicles more affordable in a challenging macroeconomic environment will be a “key driver of growth.” Morgan Stanley analysts also see Tesla’s share price weakness as a “window of opportunity to buy,” citing the company’s potential to widen its lead in the EV market through its cost and scale advantages.
However, in an attempt to spur sales and bolster demand, Tesla has cut prices on most of its electric cars in the United States and Europe by as much as 20%. The automaker is facing increasing competition in the global market for electric vehicles and rising interest rates in the United States, which have increased the cost of financing vehicle purchases. The cuts will allow some of Tesla’s lower-priced models, depending on optional features, to qualify for federal tax credits of $7,500 that were made available starting January 1 under the Inflation Reduction Act.
In addition to the price cuts, some Tesla owners are expressing frustration with the company after the unexpected price change, feeling like they were “duped” or taken advantage of as consumers. Oppenheimer analysts have also cut their FY2022 earnings per share (EPS) estimates for Tesla in a report released on Thursday, January 12th. Oppenheimer analyst C. Rusch now expects that the electric vehicle producer will post earnings per share of $3.48 for the year, down from their prior forecast of $3.51.
Overall, it is likely that we might continue to see uncertainty in Tesla stock prices for the next few trading sessions. However, following last week’s impressive performance in the markets, it is unlikely that we will see its value drop below $100, as most people predicted at the start of the year when its stock price dropped to $101.81 price level.
This post was last modified on Jan 16, 2023, 12:17 GMT 12:17