Key Swing Factors for Tesla Stock
In a recent note, analysts at Wolfe Research discussed the key swing factors for Tesla’s stock (NASDAQ:TSLA), highlighting both improved outlook and lingering uncertainty. These factors play a crucial role in determining the future performance of the company.
New Vehicle Deliveries
One of the significant swing factors identified by Wolfe Research is new vehicle deliveries. Despite management’s positive commentary, the analysts expect Tesla’s deliveries in 2024 to be lower compared to 2023, projecting around 1.75 million units or a 2% year-over-year decrease. The investment firm estimates a run-rate of 1.55 million units based on multiplying Q1 deliveries by four. They also anticipate a boost in this run-rate by approximately 65,000 units due to seasonality, particularly in China and North America.
Cost Reductions
Cost reductions are another key factor impacting Tesla’s stock. According to Wolfe Research, Tesla is effectively executing cost reductions in the first quarter. The firm predicts a gradual ramp-up for the cybertruck, with estimated unit sales of 55,000 in 2024 and 125,000 in 2025. However, they note that the cybertruck’s profitability may lag behind Tesla’s other products due to its larger battery pack (123 kWh compared to approximately 75 kWh for other vehicles) and the challenges associated with its manufacturing process. The firm also expects the cybertruck to reach gross profit later this year when production ramps up to a 125,000-unit run-rate.
Operating Expenses
Wolfe Research anticipates relatively flat operating expenses for Tesla in 2024 compared to the previous year, amounting to approximately $7.8 billion. The recently announced headcount reductions are expected to offset investments and operating costs related to artificial intelligence (AI). While the firm acknowledges an improved outlook for Tesla, they highlight the presence of uncertainty in key areas.
The analysts further suggest that rising take rates, the deployment of Full Self-Driving (FSD) technology in new markets such as Europe and China, and the initial rollout of robotaxi services will serve as crucial proof-points for Tesla’s future performance.
Overall, while the outlook for Tesla has improved, there are still uncertainties surrounding key factors such as new vehicle deliveries, cost reductions, and operating expenses. These factors will continue to influence the performance of Tesla’s stock in the coming years.
