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Bulls win Tesla 'Super Bowl' on demand as bears focus on plunging gross margins

Published 01/26/2023, 06:40 AM
Updated 01/26/2023, 07:08 AM
© Reuters.  Bulls win Tesla 'Super Bowl' on demand as bears focus on plunging gross margins
TSLA
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By Investing.com Staff

As one analyst put it, Tesla's (NASDAQ:TSLA) fourth-quarter earnings report had something for bulls and bears. However, based on the +7% price action Thursday morning, the bulls are winning currently. Contributing to the upside are comments from CEO Elon Musk that the recent price cuts have stirred significant demand. The stock has at least two price target hikes on Wall Street following the numbers and no price target cuts have been reported yet.

Wedbush lifted its price target to $200 from $175, while reiterating an Outperform rating. It said the earnings call was "Tesla's Super Bowl", with Musk & Co. delivering in "epic fashion with demand that is currently 2x production coming out of the gates in 2023 and laying out a 1.8 million delivery bogey for the year which was exactly what the bulls wanted to hear and the bears (for now) will go back into hibernation mode."

Wolfe Research also raised its price target on the Outperform-rated stock - to $185 from $160 - saying growth is re-accelerating and advantages versus peers appear to be widening.

In the bear camp, Bernstein analysts highlighted that auto gross margins were much worse than anticipated. They note - 24.3% excluding EV credits and 23.1% also excluding a one-time FSD revenue recognition. This versus the consensus of 26.4%.

"Most notably, these margins were before the real price cuts kicked in earlier this month," the analysts added. "With ~10%+ incremental price reduction YTD, auto gross margins ex-credits could certainly be sub-20% for some quarters in 2023 (given the price cuts point to a $5000+ reduction in gross profit dollars sequentially)."

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