In a note published on Friday, Barclays reiterated its Equal-Weight rating and $180 price target for Tesla (NASDAQ:TSLA), indicating the company’s cautious view.
The principal rationales behind this position center on expected low delivery volumes and persistent core issues.
Barclays projects that Tesla will supply about 415,000 units in 2Q24, a substantial decrease from the 444,000 units predicted by the consensus. The analysts stated, “We estimate 2Q deliveries of ~415k units, below current consensus of 444k,” and attributed this to China’s moderate production growth and Europe’s sluggish sales.
This indicates a year-over-year volume decrease of around 11%, even with a 7% sequential rise. This is Tesla’s weakest-ever quarterly year-over-year volume performance.
The company also pointed out possible problems with inventories. Barclays noted that “production ~420k units, implying further inventory build,” and they projected another small inventory rise of around 5,000 units, bringing the total number of Teslas in stock worldwide to approximately 150,000 units.
Furthermore, Barclays anticipates further hazards to Tesla’s profits in the future. “2Q24 margins may see new trough; further negative EPS revisions ahead,” said the paper. This follows a dramatic underperformance in 1Q24 deliveries, which totaled 387,000 units below forecasts of 415,000–430,000 units.
While the market has been interested in Tesla’s strategic shift toward driverless vehicles and artificial intelligence, Barclays also pointed out that a poor delivery outcome may draw attention back to the company’s difficult fundamentals.
Barclays finished by stating, “We believe Tesla is likely to face continued negative revisions on 2024 and ’25 estimates,” highlighting their cautious outlook on the company.
