Tesla Inc. shares jumped Thursday as investors applauded an earnings beat and upbeat comments from Chief Executive Elon Musk, with some Wall Street analysts saying the bears should go away for now.
Shares of Tesla
rose as much as 10% in session, on track for its best since mid December and extending a winning streak for a fifth day. The gains boosted rivals such as China’s NIO
Tesla delivered what it said were record sales and profit for the fourth quarter, though those numbers were not completely up to Wall Street’s expectations. Adjusted earnings of $1.19 a share came in better than expected, but revenue fell short, even as it jumped to $24.32 billion, from $17.7 billion a year ago.
Smoother over those “mixed” results were comments from Musk about strong January orders and demand outstripping production, noted Citi analyst Itay Michaeli, who lifted his price target slightly to $146 per share from $137.
“Given the heightened focus on the implications of recent price-cuts on demand & gross margins, management’s commentary will likely be met with some relief as it injects some much-needed visibility,” Michaeli told clients.
But he said questions remain as fourth-quarter margins came in softer, free-cash flow disappointed and strong order trends will need to be sustained.
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“To that, the 2023 delivery guide will likely also draw some debate,” he said. The company guided to 1.8 million units, below the 2 million it’s capable of, citing supply chain risks, though that could come to be viewed as more positive versus other auto makers, said Michaeli, who is keeping a neutral rating on Tesla, citing “balanced risk/reward.”
Wedbush analysts Daniel Ives and John Katsingris lifted their price target to $200 from $175 per share, keeping an outperform rating on the stock.
“In Tesla’s Super Bowl last night, Musk & Co. delivered 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,” they told clients.
The Wedbush analysts said they walked away from the earnings with the sense that Tesla was sacrificing margins in the near term for higher volumes, “the right strategic poker move to put an iron fence around its customer base and fend off growing EV competition coming from Detroit, Europe and China.”
Over at Truist Securities, a team led by analyst William Stein was taking comfort in what they said was a promising future for the company. While the 1.8 million unit delivery figure was a disappointment, he said they expect that number to grow to 7 million units by 2030.
Stein said they expect AI projects — Full-Self Driving, its supercomputer platform Dojo and humanoid robot Optimus — “to provide significant high-margin growth opportunities.”
Stein said they were looking to Tesla’s March 1 investor day to deliver the next possible catalyst for shares. The EV maker on Wednesday teased a “next generation” vehicle platform, saying more details will be revealed at the event. Also in the pipeline, the analyst noted, pilot programs of the Tesla Semi truck, with volume production coming in 2024.
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Colin Rusch at Oppenheimer highlighted a few potential concerns for Tesla bears: a recession impacting new-car purchases, increased competition, and ongoing uncertainty around Twitter’s finances.
Shares are likely to trade higher into the March 1 investor day, Rusch said. For now, however, “we continue to expect a choppy
start to the year and remain on the sidelines as China demand becomes clearer post-Lunar New Year and macroeconomic volatility slows,” the analyst said.
Oppenheimer has the equivalent of a hold on Tesla stock. Tesla has lost about 50% in the past 12 months, compared with a retreat of around 7% for the S&P 500 index.
Claudia Assis in San Francisco contributed to this report