Dialing Down Expectations
Deutsche Bank analyst Emmanuel Rosner has expressed concerns about Tesla’s performance, predicting a “lower-growth period” and potential downside to its fourth-quarter earnings. Rosner expects lower sales and volumes, along with delays in meaningful production levels of the Cybertruck.
In a note on Thursday, Rosner adjusted his fourth-quarter revenue and profit expectations, stating that Tesla might only meet Wall Street’s unit sales expectations. Rosner also reduced his price target on the stock from $275 to $260, projecting a 6% upside over Thursday prices.
Downside Risks and Limited Volume Growth
Rosner believes there is still a notable downside risk to Tesla’s consensus for 2024 due to limited volume growth in the coming year. While he estimated that Tesla would sell 476,000 vehicles in the fourth quarter, allowing them to reach the projected 1.8 million vehicles for the year, Rosner remains cautious about future expectations.
According to Rosner, Tesla has acknowledged being in an intermediate lower-growth period after experiencing significant growth with the Model 3 and Model Y. However, before entering the next high-growth period driven by its next-gen platform, Tesla will face challenges.
Deutsche Bank’s Perspective
Deutsche Bank shares Rosner’s concerns, seeing considerable downside risk to earnings due to lower volume expectations than what the market believes. Rosner’s current estimate for fourth-quarter revenue is $24.7 billion, slightly lower than his previous projection of $24.9 billion. He attributes this adjustment to a decrease in average selling prices.
Looking ahead to 2024, Rosner maintains a bearish outlook for Tesla. He predicts muted volume growth and expects price declines of approximately 6% year over year. One factor contributing to this forecast is the loss of consumer tax credits for the Model 3 in the U.S., with the Model Y potentially seeing a similar effect.
Ultimately, the focus remains on Tesla’s next-generation platform, which Rosner believes will be pivotal for the company’s future.
Tesla reports its production, deliveries, and unit sales on a quarterly basis.