Wedbush cuts Tesla PT to $300 as Q1 deliveries signal ‘nightmare quarter’

Investing.com-- Wedbush analysts cut their price target on Tesla Inc (NASDAQ:TSLA), calling the first three months of 2024 a “nightmare quarter” for the electric vehicle maker as it grappled with sluggish deliveries and weak demand in major market China. 

Wedbush cut its price target on Tesla to $300 from $315, and maintained the EV maker at an “outperform” rating. 

The main driver of the PT cut was a substantially lower estimate for deliveries in Q1. Wedbush slashed its Q1 delivery estimate to 425,000 vehicles from 475,000 vehicles, stating that the EV maker saw a “perfect storm” of demand issues.  

“The biggest and most concerning issue for Tesla (and its investors) remains China as rising EV competition and a lingering price war has made this key market very challenging for Tesla the last year and especially this quarter,” Wedbush analysts wrote in a note. 

Tesla had triggered a bitter price war in China over the past two years, as it sought to grab a bigger share in the world’s biggest EV market. But the move also ramped up competition from local EV makers, with BYD (SZ:002594) (HK:1211) outpacing Tesla in recent quarters with higher Chinese sales. This trend also saw BYD overtake Tesla as the world’s best-selling EV maker. 

But while China’s EV market remained resilient through 2023, cracks were now beginning to show, especially as the country grapples with slowing economic growth and sluggish consumer spending. 

Wedbush still bullish on FSD/autopilot strategy 

But Wedbush analysts maintained their outperform rating on the stock, stating that they remained highly confident on the EV maker’s full self-driving (FSD) ambitions. 

They expect Tesla’s presence in the EV market to grow in the coming years, and that successful execution of FSD and artificial intelligence would help the company break a trough in its margins.

Wedbush analysts called on CEO Elon Musk to provide a formal guidance range on margins and deliveries for 2024 and address shareholder concerns over demand issues in China, while also giving investors a roadmap for Tesla’s plans to monetize AI. 

Wedbush analysts also said that Musk “needs to commit to being CEO of Tesla” for the next three to five years, and that the firm also needed to start a “real advertising campaign.”