Tesla (TSLA) PT Lowered to $138 at HSBC, 'cheaper cars are not necessarily driving higher volume'

HSBC analyst Michael Tyndall lowered the price target on Tesla (NASDAQ: TSLA) to $138.00 (from $143.00) while maintaining a Reduce rating.

The analyst comments "Timing of delivery of pre-revenue opportunities is uncertain: Aside from slowing EV volume growth, our key concern relates to the uncertainty of timing and commercialisation for Tesla's various ideas (Dojo, FSD, Optimus etc.) from which it derives a significant share of its valuation. We see a longer timeline than the current valuation reflects and CEO Musk's comments (on the 4Q23 call) terming Dojo as "long shot", "high risk, high payoff" with "low probability of success" reinforces our view. In addition, the dispute over the CEO's pay adds another layer of uncertainty and raises questions over governance and what happens if the outcome is not to CEO Musk's satisfaction. 1Q24 deliveries came in at 387k (-9% YoY and -20% QoQ). They were 13% below the company collated consensus. The miss was largely a shortfall in Model 3/Y deliveries of c12%. To meet current 2024 consensus, deliveries need to grow c17% in the remainder of the year. While the potential refresh of the Model Y due later this year (Bloomberg, 27 December 2023) could help, there have been contradictory press reports suggesting that it may be delayed (electrek, 12 February 2024). That makes the volume outlook tough. In addition, Q1 production @ 433k units, was down 2% YoY, although ahead of deliveries by 47k units. Management cited issues relating to "updated Model 3 at [the] Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin.", but these seem to speak to weak production rather than soft demand."

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