Jon Hadad

About the Author Jon Hadad

Jon Hadad graduated from the University of Delaware with a degree in political science. Prior to joining the Smarter Analyst team, he was an industry analyst at a New York research firm.

This Analyst Remains Cautious on Tesla (TSLA) Stock Ahead of Annual Shareholders Meeting


Tesla’s (TSLA) Elon Musk usually gets greeted to major applause. This may change tomorrow.

Tuesday, Tesla will host its annual shareholders meeting, and many won’t be surprised if management isn’t greeted with wide-open arms. After taking investors on a roller-coaster in 2018 — where share prices dropped or rose by more than 10% a dozen times — Tesla’s stock has plummeted 37% so far this year. The company continues to be plagued with challenges on many fronts, including pricing worries, demand across the entire product-line, production instability and financing questions.

Ahead of the meeting, analyst Daniel Ives of Wedbush maintains his Neutral rating with a $230 price target. (To watch Ives’ track record, click here)

Ives believes the meeting could be “noteworthy around Musk and his comments on the state of business going into the rest of 2019/2020.” The analyst believes Tesla is at a “fork in the road scenario,” with profitability hinging on Tesla’s ability to sell the Model 3 at once-expected levels. Ives says, “Model 3 demand needing to rebound significantly into the next few quarters for the company to deliver sustained profitability which remains a hot button issue of the Street in light of the softness seen in the March quarter and the recent capital raise.”

Historically, Tesla has set lofty goals for itself, which has been both a blessing and a curse. The company set guidance unit sales of 360k to 400k units, which Ives says seems to be a “Herculean task”, unless “US Model 3 demand spikes back materially in 2H.” The analyst sees a best case scenario of 360k-370k.

While the company may struggle this year, Ives, like many others, is looking to the long term. The analyst points out that, “longer term production targets are attainable for Tesla…as it all comes down to the right balance of its cost structure vs. hitting production targets in Fremont and Giga which remains a lingering challenge for the company.” Ives believes the company must “catalyze demand in the US and see Europe Model 3 success over the coming quarters to get back on the yellow brick road to profitability heading into 2H19/FY20.”

All in all, the analyst community is divided, as there is no singular way to look at Tesla stock. While some are looking at the near-term, nervously, expecting trouble to continue, others look long-term, expecting the company to follow up on promises like self-driving technology. TipRanks analysis of 24 analyst shows a Hold consensus, with seven analysts saying ‘buy,’ six saying Hold and 11 recommending Sell. The average price target among these analysts stand at $264.5, which represents a 29% increase from current levels. (See TSLA’s price targets and analyst ratings on TipRanks)

 

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