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Shares of Tesla Inc. fell Tuesday after J.P. Morgan analyst Ryan Brinkman affirmed his long-time bearish call after the electric-vehicle giant missed already-lowered delivery expectations.
The stock
TSLA,
shed 0.9% in premarket trading. On Monday, after Tesla reported the deliveries miss, the stock initially fell as much as 3% intraday, before recovering to close up 0.6%.
Brinkman reiterated the underweight rating he’s had on Tesla’s stock for at least the past three years. That makes him one of the seven analysts, of the 45 surveyed by FactSet, who were bearish.
He raised his stock price target to $135 from $120, as he reset his timeline for the target to December 2024 from December 2023.
While the delivery data was disappointing, Brinkman said the decline in expectations is “the least meaningful” of expectation resets for Tesla, as the volume weakness has come despite large declines in average selling prices.
Basically, the lowered prices have failed to boost sales volumes, which should weigh even more on profits.
And while earnings expectations have already fallen sharply this year — the FactSet consensus for third-quarter earnings per share has fallen to 75 cents from $1.40 at the end of 2022 — the stock has soared 104.3% year to date through Monday. Meanwhile, the Global X Autonomous & Electric Vehicles ETF
DRIV
has advanced 17.1% this year and the S&P 500 index
SPX
has gained 11.7%.
Brinkman noted that expectations for 2023 operating profit for Tesla have fallen below that of legacy automakers Ford Motor Co.
F,
and General Motors Co.
GM,
The FactSet consensus for earnings before interest, taxes, depreciation and amortization (Ebitda) for Tesla is currently $16.11 billion, compared with $16.30 billion for Ford and $16.88 billion for GM.
Tesla is scheduled to report third-quarter results on Oct. 18, after the closing bell.
Brinkman said Wall Street bulls contend Tesla missed on deliveries despite the lower prices, not because of a demand problem, but because the manufacturing downtime the company took for upgrades and to prepare for new model launches led to lower supply. But he said Tesla appears to have a “near record level of inventory on hand,” and he notes other automakers have seen price increases amid supply disruptions.
“We primarily attribute the continued collapse in Tesla consensus deliveries volume, revenue, earnings, and cash flow to a mis-extrapolation of earlier trends (with a pinch of ‘irrational exuberance’ thrown in),” Brinkman wrote, while others may blame increased competition.
