Barclays remains cautious on Tesla stock. Here's why

Barclays has issued a cautious outlook on Tesla (NASDAQ:TSLA), maintaining an Equal-Weight rating and a price target of $180 on the stock in a note Friday.

The key reasons for this stance revolve around anticipated weak delivery numbers and ongoing fundamental challenges.

Barclays estimates Tesla's 2Q24 deliveries to be around 415,000 units, which is significantly below the consensus estimate of 444,000. "We estimate 2Q deliveries of ~415k units, below current consensus of 444k," the analysts noted, attributing this to weak sales in Europe and modest production increases in China.

Despite a 7% sequential increase, this still implies a year-over-year volume decline of approximately 11%, marking Tesla's weakest-ever quarterly year-over-year volume result.

The firm also highlighted potential inventory issues. "Production ~420k units, implying further inventory build," Barclays pointed out, expecting another modest inventory increase of about 5,000 units, which would raise global Tesla inventory to around 150,000 units.

Moreover, Barclays sees further risks ahead for Tesla's earnings. "2Q24 margins may see new trough; further negative EPS revisions ahead," the note stated. This comes after a sharp miss in 1Q24 deliveries, which were 387,000 units compared to expectations of 415,000-430,000 units.

Barclays also indicated that while Tesla's strategic pivot toward autonomous vehicles and artificial intelligence has captured market attention, a weak delivery result could refocus investor scrutiny on its challenging fundamentals.

"We believe Tesla is likely to face continued negative revisions on 2024 and '25 estimates," Barclays concluded, underscoring their cautious stance on the stock.