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Tesla stock likely to witness 'significant pressure' going forward - Deutsche Bank

Published 03/28/2024, 08:22 AM
Updated 03/28/2024, 08:22 AM
© Reuters.

Deutsche Bank analysts suggested today that Tesla (NASDAQ:TSLA) stock is likely to face "significant pressure" in the near future.

The investment bank’s research note sheds light on the potential challenges that Tesla may encounter, providing investors with insights into the future trajectory of the company's stock performance.

Tesla earnings/deliveries preview

Analysts are downbeat on the company’s first-quarter deliveries and the outlook in the near-term. Wedbush recently cut its Tesla price target to $300 from $315, telling investors that deliveries have been a nightmare this quarter.

"Let's call it like it is: 1Q deliveries has been a nightmare quarter for Tesla as China demand remains very soft coming out of the gates for 2024,” the firm stated in a note. “While supply issues (factory planned downtimes/Berlin fire) has impacted supply, there is no denying this has been a quarter to forget for Musk and Tesla.”

“1Q delivery estimates have now gone from 475k to 425k as Tesla saw a perfect storm of demand issues hit this quarter, which hurt delivery/sales.”

Meanwhile, Citi also recently cut its Tesla price target to $196 from $224, stating that it expects a first-quarter deliveries miss.

“Ahead of Tesla’s Q1 delivery release, we’re lowering estimates to reflect recent data points. Our Q1 delivery estimate goes to 429.9k from 473.3k,” said the bank's analysts.

They added: “While buy-side Q1 delivery estimates (we believe in the low 400s range) sit well below the sell-side consensus (460-470k, but coming down), the setup remains challenging with street estimates still looking too high, not only for 2024 but also 2025.”

Mizuho downgraded Tesla to Neutral in a recent note, telling investors that in the near term, Tesla’s deliveries remain challenging.

Elsewhere, Deutsche Bank lowered its first-quarter delivery expectations and further reduced its estimates for the quarter and the year following weaker-than-expected China sales and Tesla’s recent plan to cut production in the region

“For Q1, we now expect ~414k units, down from 427k units prior, due to weaker-than-expected sales in China in the last few weeks of March. We also cut our full year deliveries estimate to ~1.9m units (consensus: ~2.06m units), now representing only mid-single digit growth for the year (vs. HSD prior),” said the firm.

Tesla stock forecast

Deutsche Bank also stated that they continue to see pressure on margins and earnings, as Tesla has already “announced deep price cuts in both China and Europe earlier in the quarter and made further moderate price adjustments in February to incentivize vehicle purchases.”

“Although Tesla has announced it will raise prices in the U.S. and China effective April, we view it as an attempt to boost sales in March rather than a sign of solid demand,” added Deutsche Bank.

Due to their view on Tesla deliveries, the firm also sees a risk to earnings in the quarter. Looking at the full year, they continue to see a “large risk” to earnings expectations due to continued downside to volume and pricing expectations.

The worries over volume and earnings “could further dampen investor sentiment and put significant pressure on the stock, especially considering the meaningful downside risk we see to 2025 earnings as well,” stated Deutsche Bank.

Redburn analysts recently reiterated a Sell rating on TSLA stock.

“We highlight the risk of further disappointment. Tesla’s stickier unit costs amplifies its exposure to weakening EV pricing."

Similarly, Citi analysts cut the price target on Tesla shares and added that “the setup remains challenging with street estimates still looking too high, not only for 2024 but also 2025.”

“Net-net, our view from a few weeks ago is unchanged—we remain Neutral-rated awaiting a more convincing entry point.

Latest comments

Its not just a car company. Lets go Brandon.
I'm a TSLA buyer at $80... I've been saying for a year that's all they're worth and the picture hasn't gotten any better.
I'm not a TSLA short. I am too conservative to short stocks or buy on margin. I buy stocks that are worth the price with the intention of riding them on the way up and holding for the long term. TSLA is still priced as if they are a world leading innovator but they've completely given up the lead they had by every measure. They aren't the top selling EV brand, they've stopped innovating, their models are all old (except for the Cybertruck which I'm convinced is destined to be a business boondoggle), their margins has slipped and have continued to slip (it should be an obvious and huge red flag to everyone that Tesla is now resorting to competing on price). I very highly suspect it's a matter of time before there is a class action suit from the buyers who paid $10k up front for FSD which will never be released and that the only reason Musk won't admit that is that he's kicking the can down the road because it's going to be such a financial disaster. They are not a software company or an AI company. They are a car manufacturer with a great brand and a loyal following, period. That's it. They will eventually be priced as such. $80, that's my TSLA target.
You probably drive a Ford Escort and never bought a single share of TSLA at any price.
Big deal hater, Tesla faces difficulty always cause people hate it for some reason. I guarantee 10 yrs from now everyone will remember how Tesla was best first in evs and still is.
People hate meme stocks lol... basically Mag7 and the whole of stock market
I think those you are calling haters are (mostly) just realists looking at the business.
analysts/ wall st don't understand Tesla it's an ai company not just EV one day it'll be valued as such when the penny drops.
If you 're smart you sell Tesla, it still is way over priced...
says desperate put owner
These analysts are idiots, now lowering their price targets after the stock dumped to $170
what do invest in
Clayvid game, definitely not a company still trading as a meme stock but whose legacy as an innovator and market disruptor is far in the rearview mirror.
A huge buy signal😎
I guess you are not very successful in the stock market... it's a clear sell...
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