Tesla Dives As Analysts Weigh In After Earnings Miss

The EV company has received a number of price targets lowered and an upgrade.

By Investor’s Business Daily

Tesla ( TSLA ) Stock received an upgrade and several price cuts in the last 24 hours following the EV giant announced that the second quarter earnings fell over 40%, which was lower than what was expected. The company’s revenue soared, which fueled rising regulatory credits.

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TSLA shares fell by 12% to 216.72 in the market’s action the previous day, in the wake of Tesla Q2 results as well as the company’s conference call.

No Change In Outlook; Tesla Downgrade

Adam Jonas, Morgan Stanley’s famous autos analyst as well as an avid Tesla investor said late on Tuesday that there was “no big change in outlook” and that Tesla is “muddling through the EV recession.”

Jonas stated that the outlook for 2024 has been a “largely identical reiteration of language from the previous quarter’s outlook” and said that it “should keep consensus little changed.”

After earnings, Cantor Fitzgerald downgraded Tesla to neutral from overweight, while increasing the price target 245 from 245 from 230. The company wrote that, with TSLA increasing by more than 70% over the past three months, it’s “becoming a bit more conservative on valuation in the near-term.”

Then both Goldman Sachs and Citigroup cut Tesla price goals. Goldman has lowered its price targets for Tesla to 230, down from 248 and maintained its rating neutral on Tesla’s shares. Citi Analyst Itay Michaeli lowered his price target down to 258 instead of 274.

Tesla Earnings At A Glance

The maker of electric vehicles reported that its earnings dropped by 43 percent to 52 cents a share. In the quarter, revenue was $25.5 billion, which was up by 2 percent compared to. the previous year’s quarter. Tesla stated that its “achieved record quarterly revenues despite a difficult operating environment.”

The company’s gross margins dropped 23 basis points or 18 percent. Gross margins of autos, including leases and regulatory credits are 14.6 percent. Analyst expectations were 15.1 percent, as per FactSet.

The EV giant also saw its revenue from regulatory credits reach an all-time high of $890 million in the second quarter rising 216% when compared to $282 million in the second quarter of 2023.

Tesla stated that its vehicle volume growth rates for 2024 “may be notably lower than the growth rate” in the previous year. Tesla also said that the growth of their energy storage division could outpace that of its automotive business.

The earnings call Tesla CEO Elon Musk didn’t offer any new information, but continued to express his optimism regarding self-driving vehicles, the Optimus robot, and robotaxi. Musk did announce that the unveiling event for robotaxi will now take place on October. 10 instead of. the original plan of August. 8.

Tesla Stock: Not A ‘Trump Trade’

Wells Fargo wrote that Tesla stock is not likely to be a ” “Trump trade.” The analysts also noted the fact that Tesla shares are trading lower due to weak fundamentals, which was evident during Q2.

The firm also said that If former President Donald Trump wins the 2024 election and removes Inflation Reduction Act tax credits for electric vehicles this could impact Tesla’s short-term earnings.

UBS Analyst Joseph Spak told investors there is pressure on the auto business. Spak stated that Tesla’s vehicle range has become “limited” and while units might increase, it could require ongoing marketing.

UBS retained its sell rating by setting the price target of 197 and also that the October. 10, robotaxi-related day may be an “sell-the-news” event.

Robotaxi Thrills

Additionally, Wedbush Securities analyst Dan Ives who is a long-time Tesla investor, tweeted Tuesday that the roboticaxi announcement could “unleash the beginning of the AI story at Tesla which we value at $1 trillion alone over the next few years.”

Ives stated Ives added that Tesla bears will be focusing on the auto gross margins as well as the total revenue from regulatory credit. He said that these things represent “table stakes in the broader Tesla story.”

“Tesla is a robotics and AI play,” Ives wrote. “Potential investments into the xAI company under Musk could also be in the future and a smart move along with this broader AI/Robotaxi strategy.”

After the earnings conference, Musk posted a poll on X asking whether Tesla should make a $5 billion investment into xAI Musk’s artificial intelligence company. Musk said that Tesla chief stated that the board of directors and shareholders must be in agreement with the decision.

Tesla Stock

Tesla stocks have a handle of 271 purchase point in a consolidation that goes back a couple of months or one year, as per MarketSurge’s charts analysis.

Shares fell on Wednesday, undercutting their 21-day moving mean that is rapidly increasing as well as the low on the indicator.

As earnings were announced, investor optimism was high and Tesla stock rising over 25% during July following Tesla announced the surprising second-quarter increase in the number of vehicles sold earlier in the month.

Shareholders have recently voted in favor of the decision to give Musk his annual $56 billion pay packet and also to re-incorporate the company into Texas and transferring it to Delaware.

Tesla stock is third among the 35 members of the IBD Auto Manufacturers industry group. The stock is rated 85 Composite Rating out of a possible 99. The shares are rated rating of 89 RSR and an 60 EPS Rating..

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