Tesla’s earnings disappointed Wall Street and the company saw a sharp selloff on Thursday.
Wedbush’s Dan Ives said Tesla could take some specific steps to calm investors.
He called for an end to price cuts, more clarity on AI and for Elon Musk to focus on the business.
Huge disappointment that of Tesla fourth trimester earnings prompted a severe reaction from Wall Street and triggered the biggest stock sell-off in 21 months.
Thursday’s 12% decline wiped $80 billion in market value as profits and revenues fell short of expectations. Tesla’s warnings of even slower growth ahead have only amplified concerns and the outlook has plummeted.
Following the report, Dan Ives of Wedbush Securities, a longtime Tesla buyer, criticized Tesla’s failure to reassure investors and called the conference call that followed the earnings release a “train wreck.” “.
“Tesla is having ‘one of those times’ with yesterday being a dark day for the bulls (and for us) with the door left open to further price cuts and a lack of guidance for 2024 putting massive pressure on stocks,” Ives wrote in a statement. note Friday.
Although Wedbush maintains its Outperform rating over the electric vehicle maker, Tesla was removed from Wedbush’s Best Ideas list. Ives said there are specific steps the company can take to right the ship and get back into the good graces of investors.
Here are the main tasks of Elon Musk’s automaker.
Stop lowering prices
Increasing competition in the market has pushed Tesla to reduce the prices of its vehicle models by about 25% until last year, making its electric vehicles cheaper than some gas alternatives.
But this strategy, intended to stimulate demand, significantly reduced profit margins, which investors found difficult to digest. To that end, Ives called on Tesla to stop depreciating its cars and instead focus on maintaining leverage over other automakers.
The company should also come up with a realistic production and delivery schedule for the Model 2 and a sub-$30,000 vehicle in 2025, he said. This decision could avoid a repeat of the Cybertruck, as production deadlines were spanning years on this vehicle model.
Get serious about AI
Tesla is expected to hold an “AI Day” before summer so investors can learn more about Dojo, Optimus and Full Self-Driving. artificial intelligence initiatives touted by CEO Elon Musk.
The auto giant also needs to continue an aggressive AI acquisition spree and find about $30 billion in capital to make those projects possible, Wedbush said. Long-term revenue targets for AI are also necessary.
Although Ives based his optimism about Tesla on speculation that it would become an AI leader, Musk recently threatened to extract AI projects of the car manufacturer, unless its stake is increased to 25%.
To achieve this, Ives called for the creation of an “X Holding” structure, which includes AI initiatives. He is also expected to be offered a compensation package requiring him to remain CEO until at least 2030.
Obtain outside capital to finance X
Many investors were angered by Musk’s purchase of X, formerly Twitter, a distractionand were dismayed to see Musk sell massive amounts of Tesla stock to finance his $44 billion acquisition in October 2022.
It is necessary to have assurance that Musk will not sell other shares to finance X, Ives said. Instead, the company should obtain outside capital.
Other changes Ives wants to see include a $10 billion stock buyback as a show of confidence for investors. He also stressed the need to improve conference calls, calling recent calls “horror shows.”
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