Tuesday, GLJ Research maintained a Sell rating on Tesla shares (NASDAQ:TSLA) with a price target of $23.53, revising down its Q1 delivery estimates due to softening demand in China and the United States, coupled with sluggish European sales in recent times.
The research firm highlighted Tesla's valuation, which exceeds the combined worth of Toyota (NYSE:TM) and BYD (SZ:002594), despite Tesla selling only 16% of the vehicles these companies did over the last twelve months.
The analyst at GLJ Research indicated that for the first time since the second quarter of 2020, which was impacted by COVID-19, Tesla's year-over-year sales are projected to decline in the first quarter of 2024.
This anticipated downturn in sales reinforces the firm's negative stance on Tesla's stock. Tesla's valuation stands at 57.4 times its estimated earnings per share for 2024, significantly higher than automotive peers Ford (NYSE:F) and General Motors (NYSE:GM), which trade at 7.1 and 4.9 times their respective 2024 earnings estimates.
The updated delivery estimate for Tesla in the first quarter of 2024 has been lowered to a range between 406,500 and 417,500 vehicles, a reduction from previous estimates. This figure falls short of the consensus estimate of 462,200 vehicles. The firm suggests that the lowered delivery forecast could lead to a series of negative delivery and earnings revisions from Wall Street analysts concerning Tesla.
In support of their outlook, GLJ Research pointed to recent actions by other analysts, such as Bernstein's Toni Sacconaghi, who just this morning reduced his price target on Tesla to $120 from the prior $150. The firm anticipates that these adjustments may shape the broader sentiment among financial analysts regarding Tesla's performance.
GLJ Research concluded its commentary by emphasizing its view of Tesla as the top short opportunity in the global stock market, noting the low percentage of Tesla's float currently being shorted. This stance is taken despite the high valuation multiples when compared to industry counterparts.
InvestingPro Insights
Amidst concerns over Tesla's (NASDAQ:TSLA) demand and delivery estimates, the company's financial health and market performance offer a mixed picture. While Tesla holds more cash than debt, a key indicator of financial stability, it is trading at a high earnings multiple with a P/E ratio of 36.43, suggesting a premium valuation compared to its earnings. The company's revenue has grown by 18.8% over the last twelve months as of Q1 2023, a positive sign of its business expansion. However, analysts have raised concerns, with 10 revising their earnings downwards for the upcoming period, reflecting potential challenges ahead. Despite this, Tesla remains a prominent player in the Automobiles industry, and its stock price movements have been quite volatile, with a significant decline over the last three months. Investors should note that Tesla does not pay a dividend, which may be a consideration for those seeking income from their investments.
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