Barclays Remains Cautious on Tesla Stock
Barclays has issued a cautious outlook on Tesla stock, maintaining an Equal-Weight rating and setting a price target of $180.
The key reasons for this stance revolve around anticipated weak delivery numbers and ongoing fundamental challenges.
Estimated Delivery Numbers
Barclays estimates that Tesla's 2Q24 deliveries will be around 415,000 units, significantly below the consensus estimate of 444,000 units. The analysts noted weak sales in Europe and modest production increases in China.
Even though this prediction represents a 7% sequential increase, it still suggests a year-over-year volume decline of about 11%, marking Tesla's weakest-ever quarterly year-over-year volume result.
Potential Inventory Issues
The firm highlighted potential inventory issues, expecting another modest inventory increase of about 5,000 units, which would raise the global Tesla inventory to around 150,000 units.
Earnings Risks
Barclays sees further risks ahead for Tesla's earnings. "2Q24 margins may see new trough; further negative EPS revisions ahead," the note stated. This follows a sharp miss in 1Q24 deliveries, which were 387,000 units compared to expectations of 415,000-430,000 units.
Strategic Focus and Challenges
While Tesla's strategic pivot toward autonomous vehicles and artificial intelligence has captured market attention, a weak delivery result might refocus investor scrutiny on its challenging fundamentals.
"We believe Tesla is likely to face continued negative revisions on 2024 and 2025 estimates," Barclays concluded, underscoring their cautious stance on the stock.
