The $Tesla (TSLA.US)$ sell-off continues with no end in sight. There could be more negative news down the line, according to Wedbush analyst Daniel Ives.
The Tesla Analyst: Ives maintained his Outperform rating on Tesla shares but reduced the price target from $250 to $175.
The Tesla Thesis: Tesla will likely miss the reduced Street estimates for the fourth quarter, Ives said, citing higher inventory levels, the recent price cuts and overall production slowdowns in China.
The analyst lowered his fourth-quarter delivery estimates from 450,000 units to a range of 410,000-415,000 units, below the Street estimate of 435,000 units. After the "Cinderella demand story environment" since 2018, Tesla is facing serious macro and company-specific EV competitive headwinds into 2023, he noted.
Ives also lowered his fourth quarter and 2023 estimates in anticipation of a softer demand trajectory.
Musk is viewed as 'asleep at the wheel' from a leadership perspective for Tesla at the time investors need a CEO to navigate this Category 5 storm."
- the analyst said.
The billionaire, instead, is focused on Twitter — a nightmare that never ends for investors — Ives said. Investors hope a new CEO is picked in the coming weeks as a step forward, added Ives.
Musk's stock sales despite his assertion that he is done with it, his political firestorm on Twitter and brand deterioration for Musk and Tesla have proved to be a complete debacle for the stock, the analyst said.
Looking into 2023, despite the Musk/Twitter circus and softer demand trends, Tesla still has potentially $5-$6 of earnings power and the ability to achieve 40%+ delivery growth in a brutal environment, Ives said. Since long-term electric vehicle demand is likely to meaningfully accelerate over the coming years, Tesla's transformational story remains intact, he added.
We believe if Musk refocuses back on Tesla, truly stops selling stock (walk the walk, not just talk the talk), the Board initiates a buyback, and 2023 guidance is set conservative on its 4Q call in January then this stock has bottomed in our opinion and works from here."
- Wedbush said.
Price Action: Tesla closed Thursday's session 8.88% lower at $125.35.