Company Reports

We've raised our fair value estimate for narrow-moat Tesla to $200 per share from $195 following first-quarter earnings, due to an improved near-term outlook. Shares were up over 10% in after-hours trading as the market reacted positively to management's outlook. At current prices, we view Tesla as undervalued, with the stock trading in 4-star territory.

Tesla is one of the largest battery electric vehicle automakers in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. The company competes in the entry-level luxury car and midsize crossover sport utility vehicle markets with its Model 3 and Model Y vehicles. Tesla also sells a light truck—the Cybertruck, and a semi truck. The company plans to launch an affordable SUV and luxury sports car in the future.

On April 15, Tesla shares fell 3%. Share declines relate to Tesla’s plan to lay off more than 10% of its workforce and the departure of at least one high-level executive. The move is consistent with Tesla's strategic shift toward profitability over deliveries growth in 2024. Tesla has historically adjusted its workforce based on its strategy, hiring during periods of growth and reducing headcount during slowdowns.

On April 5, Tesla shares fell as much as 6% during the day on a Reuters article stating Tesla will cancel its plans to build an affordable vehicle, instead using the same small vehicle platform to build robotaxis. On Tesla's prior earnings call, management said it aimed for the affordable vehicle to enter production by the end of 2025 and hailed the vehicle as the driver of the next phase of growth for Tesla. Less than an hour after the article was published, Tesla CEO Elon Musk disputed Reuters' claim in a post on the social media platform X, formerly known as Twitter. After Musk's post, Tesla shares rallied and were down just over 3% at the time of writing.

Tesla announced 2024 first-quarter deliveries of 386,810 vehicles, down roughly 8.5% versus the first quarter of 2023. We have updated our model to assume full-year 2024 deliveries come in roughly flat versus 2023 at a little over 1.8 million vehicles, down from our prior forecast for 10% growth. With our long-term outlook largely unchanged, we reduce our Tesla fair value estimate to $195 per share from $200. Our narrow moat rating is unchanged.

Tesla is one of the largest battery electric vehicle automakers in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. The company competes in the entry-level luxury car and midsize crossover sport utility vehicle markets with its Model 3 and Model Y vehicles. Tesla also sells a light truck—the Cybertruck, and a semi truck. The company plans to launch an affordable SUV and luxury sports car in the future.

Tesla CEO Elon Musk's 2018 performance award has been voided by a Delaware judge following a shareholder lawsuit. The ruling can be appealed in the Delaware Supreme Court. However, whether or not the performance award holds up in court does not change our outlook for Tesla. Accordingly, we maintain our $200 per share fair value estimate and narrow moat rating.

Tesla is one of the largest battery electric vehicle automakers in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. The company competes in the entry-level luxury car and midsize crossover sport utility vehicle markets with its Model 3 and Model Y vehicles. Tesla also sells a light truck—the Cybertruck, and a semi truck. The company plans to launch an affordable SUV and sports car in the coming years.

Our key takeaway from the Tesla earnings call was the firm's strategic shift to the development and ramp-up of the new affordable sport utility vehicle, while focusing on cost cuts for its existing vehicles. This marks a change from the 2023 strategy, which was to cut prices to generate strong volume growth. We updated our forecast for lower near-term deliveries growth and lower near-term automotive gross profit margins. As a result, we reduce our fair value estimate to $200 per share from $210. We maintain our narrow-moat rating.

Tesla is one of the largest battery electric vehicle automakers in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. The company competes in the entry-level luxury car and midsize crossover sport utility vehicle markets with its Model 3 and Model Y vehicles. Tesla also sells a light truck—the Cybertruck, and a semi truck. The company plans to launch an affordable SUV and sports car in the coming years.

Tesla announced fourth-quarter deliveries of 484,507 vehicles and full-year deliveries of 1.81 million vehicles, both records for the company. The deliveries number was roughly in line with our 2023 forecast and indicates continued consumer demand for Tesla vehicles, in our view. With the deliveries results close to our forecast, we see no reason to change our outlook for the company. We maintain our $210 fair value estimate and narrow moat rating.

Tesla held its Cybertruck launch event that showcased the light truck's performance and design. After viewing the event, we see no reason to change our outlook and maintain our $210 per share fair value estimate for Tesla. Our narrow moat rating is also unchanged.

Tesla is one of the largest battery electric vehicle automakers in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. The company also competes in the entry-level luxury car and midsize crossover SUV markets with its Model 3 and Model Y vehicles. Tesla also plans to sell new vehicles over the next several years, including a light truck, a semi truck, a sports car, and an affordable sedan and SUV.

Tesla's earnings showed the effect of the company's price cuts as operating income fell more than 50% from the prior-year quarter despite 9% year-over-year revenue growth. Our annual forecast had already included the profit decline as we expected price cuts would continue to weigh on profits and margins.

Tesla announced third-quarter deliveries of just over 435,000 vehicles, down sequentially from the roughly 466,000 vehicles delivered in the second quarter. Management attributed the lower volumes to planned downtimes for factory upgrades, which is consistent with the company's reduced production during the quarter of a little over 430,000 vehicles. Through the first three quarters of 2023, Tesla has delivered over 1.3 million vehicles, and we think Tesla remains on track to meet our 2023 deliveries forecast of 1.8 million vehicles. Accordingly, we see no reason to change our $215 per share fair value estimate for Tesla. Our narrow-moat rating is also unchanged.

In 2022, battery electric vehicles represented nearly 10% of global auto sales, up from a little less than 6% in 2021. Much of the growth occurred in China, which has been a leader in EV sales over the past decade. However, with national EV subsidies in China expiring in 2022 and far lower sales in the U.S. and Europe, the market questions if EV sales can continue to grow without subsides.

An Aug. 7 regulatory filing by Tesla revealed that Zach Kirkhorn has stepped down as chief financial officer and will leave the company at the end of 2023; he will stay on until then to help with the transition. Vaibhav Taneja, Tesla's chief accounting officer, has assumed the CFO role.

We maintain our $215 per share fair value estimate and narrow moat rating for Tesla following the company's second-quarter earnings. Tesla shares were down 4% in afterhours trading as the market responded to management's commentary that further price cuts could be coming later this year. At current prices, we view Tesla shares as overvalued, with the stock trading in 2-star territory.

Tesla is one of the largest battery electric vehicle automakers in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. The company also competes in the entry-level luxury midsize car and crossover SUV markets with its Model 3 and Model Y vehicles. Tesla also plans to sell new vehicles over the next several years, including a light truck, a semi truck, a sports car, and an affordable sedan and SUV.

We maintain our $215 per-share fair value estimate and narrow moat rating for Tesla following the company's second-quarter deliveries release. During the quarter, Tesla delivered 466,140 vehicles, a new record high, and more than 80% above the prior-year quarter. This puts Tesla on track to meet our 2023 annual deliveries forecast of a little over 1.8 million vehicles, which is a little less than 40% growth for the year and we maintain our outlook.