Tesla released figures on Tuesday which showed that the electric car manufacturer delivered 386,810 cars in the first quarter, much less than even the lowest estimates. The market reacted by sending the stock down 5 per cent on Wall Street, and from the start of Wednesday it is down a further 0.5 per cent.
The disappointing report has really got the Tesla pessimists on the pitch.
– This was really the beginning of the end for the Tesla bubble, and probably the biggest stock bubble in modern history, says managing partner Per Lekander in the investment company Clean Energy Transition to CNBC.
Lekander estimates that Tesla will earn $1.40 per share for 2024, predicting the stock at $14 – down more than 90 percent from Tuesday’s closing price of $166.63.
– Zero growth stock
– Tesla is a zero-growth stock and should be valued at 10 times future earnings, compared to 58 times today. Nevertheless, the stock cannot remain at $14. If it falls below a certain level, because of everything that has happened, the company will go bankrupt, he continues to the channel.
TESLA OPTIMIST: Cathie Wood. Photo: Bloomberg
From its launch in 2015, Clean Energy Transition managed its energy funds through Lansdowne Partners, but in 2022 set up its own management company. Lekander has been short Tesla since 2020, and Clean Energy Transition will therefore benefit from a possible Tesla fall.
The hedge fund manager is aware that Tesla primarily has a demand problem.
– Tesla’s business model has been based on strong top-line growth, vertical integration and direct sales to consumers. This model is brilliant when a company is growing, but goes into reverse when sales fall, he says.
Optimist has doubts
Analysts at HSBC and TD Cowen are among those who have cut price targets on Wednesday, and even the notorious Tesla optimist Dan Ives of Wedbush Securities – with a price target of $300 – is worried.
“Let’s put it this way: While we expected a bad first quarter, this was an absolutely disastrous first quarter that is hard to explain away. We see this as a groundbreaking moment in Tesla history,” he writes according to CNBC in a customer note.
If Musk doesn’t turn this around, Ives believes the company “clearly could face darker days.”
Cathie Wood buys
Cathie Wood in Ark Invest, on the other hand, sees buying opportunities in Tesla after a price drop of 30 percent so far in 2024, and according to the channel reacted to Tuesday’s decline by increasing its exposure. Her funds have picked up about 235,000 additional shares for about $39 million.
– When the stock has been halved, this is not the time to run away if you – like us – think Tesla is going to become the network for self-driving taxis, she tells CNBC on Wednesday.
Wood has previously predicted Tesla shares at $2,000 within the next five years.
