Shares of Tesla Inc. suffered their longest losing streak since the start of the COVID pandemic, after Wedbush analyst Dan Ives slashed his price target by 30%, citing “demand cracks” for the fourth quarter and into next year.
“Based on higher inventory levels, recent price cuts and overall production slowdowns in China, it is becoming clearer based on our work that Tesla will likely miss reduced Street estimates for 4Q, with a softer trajectory for 2023,” the prolific Ives wrote in a note to clients on Friday.
Ives said he now believes the electric vehicle maker
will report fourth-quarter deliveries in the range of 410,000 to 415,000 EVs, down from his prior estimate of 450,000, and below the FactSet consensus of 429,000. That puts Tesla in danger of missing quarterly delivery expectations for the first time since the second-quarter of June 2019, according to FactSet data.
He cut his stock price target to $175 from $250, but reiterated the outperform rating he’s had on Tesla since April 2021. But of the 27 analysts surveyed by FactSet who are bullish on the stock, Ives’ target is now the lowest.
“The reality is that after a Cinderella-story demand environment since 2018, Tesla is facing serious macro and company specific EV competitive headwinds into 2023 that are starting to emerge both in the U.S. and China,” Ives wrote.
Tesla’s stock slumped 1.8% to close Friday at $123.15, the lowest closing price since September 2020. The stock has plunged 21.9% amid a six-day losing streak, which is the longest since the six-day stretch that ended March 18, 2020.
The stock was headed for the biggest monthly, quarterly and yearly declines on record.
While Ives isn’t blaming Chief Executive Elon Musk for the macro and demand “headwinds,” he did take at shot at Musk by saying the Twitter distraction is keeping him from guiding Tesla through them.
“At the same time that Tesla is cutting prices and inventory is starting to build globally in the face of a likely global recession, Musk is viewed as ‘asleep at the wheel’ from a leadership perspective for Tesla at a time investors need a CEO to navigate this Category 5 storm,” Ives wrote.
Despite softer demand in the near term and the “Musk/Twitter circus show,” Ives said he remains bullish on Tesla as he believes the long-term “transformational” story remains intact as EV demand should accelerate meaningfully in the coming years.
The stock has tumbled 65.0% year to date, while the S&P 500 index
has slumped 19.3%.