Tesla (TSLA) stock plunged during the first two trading days of the year after reporting fourth-quarter production and delivery numbers that fell short of Wall Street’s projections. Luckily, Wedbush’s Daniel Ives doesn’t have to be disappointed by the numbers because Model 3 delivery estimates were in line with his predictions, but missed the Street’s by around 3%. Despite Tesla leaving a bad taste in some mouths on Wall Street, Ives remains bullish on the stock given his view that the company is in “the early innings of a transformational EV growth opportunity for the next decade.” As such, Ives reiterates an Outperform rating with a price target of $440, showing a potential upside of 42%. (To watch Ives’ track record, click here)
Ives notes the fact that the production numbers (86,555 vehicles — up 8% quarter over quarter) show Tesla’s ability to come close to producing 6,000 Model 3’s per week. The Model S and X deliveries came in at 27,550 cars versus the analyst’s estimate of 27,288. Model 3 deliveries were 63,150, which falls in line with the analyst’s estimate of 63,376 and below the Street’s forecast of 65,300. Ives also comments on the significance of Tesla’s price cut (for tax purposes) on its stock.
In addition, Tesla has reduced pricing on the Model 3, S, and X by $2,000 in light of losing the $7,500 federal tax credit formerly dealt to buyers of the Californian electric vehicles.
“With the EV tax credit getting cut in half from $7,500 in 2018 to $3,750 beginning January 1, the lack of a significant pull forward was a bit of a surprise to the bulls in terms of 4Q Model 3 deliveries and will weigh on shares accordingly. This led to the other news that came out of left field as TSLA announced a $2k price cut this morning on its US sold vehicles to help soften the blow from the EV tax credit cut, a potential positive for demand but not what the bulls wanted to hear on the impact to profitability and ultimately the bottom line. In sum, this was a strong quarter for Tesla but Model 3 deliveries missed Street expectations and this will be a cloud over the name until the company reports earnings in late January and gives initial guidance for European Model 3 demand in 2019 which continues to be key,” Ives explains.
There’s a mixed bag of analysts betting on Tesla. TipRanks analytics shows out of 25 analysts, 10 are bullish, 7 are sidelined and 8 are bearish. The consensus price target of $336.22 shows an 8% potential upside from current levels. (See Tesla’s price targets and analyst ratings on TipRanks)