On Thursday, Mizuho maintained its Neutral rating on Tesla (NASDAQ:TSLA) with a steady price target of $230.00. The firm highlighted several challenges facing Tesla, including a potential slowdown in electric vehicle (EV) demand growth by 2025, shorter lead times and discounts for the Cybertruck, and an unclear roadmap for new model launches.
Tesla has indicated a low-cost EV could be introduced in the first half of 2025, aiming for a vehicle growth rate of 20-30% year-over-year. However, Mizuho expressed skepticism about the clarity of new model plans and noted softer EV trends.
The Cybertruck's delivery lead times have decreased to 1-2 weeks, following a significant price reduction of approximately $20,000. Additionally, Mizuho pointed out that Tesla appears less optimistic about the future of the Roadster.
In terms of future projects, Tesla mentioned the possibility of a CyberCab ramp-up in 2026, though Full Self-Driving (FSD) capabilities have not been qualified. This comes as Tesla is increasing its NVIDIA (NASDAQ:NVDA) H100/GPU units to 50,000 by the end of October, up from around 29,000, which is seen as a positive development for NVIDIA.
Market research firm IHS has revised its 2024 EV sales forecast, now expecting a 6% year-over-year increase compared to the previous estimate of 32%. Looking further ahead, Mizuho anticipates EV growth rates of 10% for 2025 and 21% for 2026, with the Chinese market being a significant driver of these figures. Despite the evolving landscape of the EV market, Mizuho's stance on Tesla's stock remains unchanged at this time.
In other recent news, Tesla Inc. has reported strong third-quarter earnings and revenue results, surpassing estimates in several key areas. The company reported third-quarter revenue of $25.18 billion, a modest increase from $23.35 billion in the same period in 2023, though slightly below the $25.37 billion estimate from LSEG.
Tesla's automotive gross profit margins, excluding credits, reached an impressive 17.1%, surpassing the consensus estimate of 14.5%. This success was attributed to the launch of the Full Self-Driving feature and improved logistics operations.
Analysts from Baird, Canaccord Genuity (TSX:CF), RBC (TSX:RY) Capital, Piper Sandler, and Wedbush Securities have all recently updated their outlook on Tesla.
Baird maintained an Outperform rating and a $280.00 price target, Canaccord Genuity raised Tesla's price target to $278, RBC Capital increased its price target to $249, Piper Sandler retained an Overweight rating and a price target of $310, while Wedbush Securities reiterated an Outperform rating with a $300 price target.
Tesla's CEO, Elon Musk, announced plans to launch a driverless ride-hailing service in California and Texas in 2024, as well as a new vehicle in the first half of 2025. These developments, along with the company's strong quarterly performance, reflect Tesla's ongoing focus on innovation, expansion, and financial growth.
/These are the recent developments in Tesla's journey, reflecting a focus on innovation, expansion, and financial growth.
InvestingPro Insights
To complement Mizuho's analysis, InvestingPro data offers additional context on Tesla's financial position and market performance. Despite the challenges highlighted in the article, Tesla maintains a strong balance sheet with more cash than debt, as noted in one of the InvestingPro Tips. This financial stability could be crucial as the company navigates the potential slowdown in EV demand growth and invests in new model development.
However, investors should be aware that Tesla's stock is currently trading at a high earnings multiple, with a P/E ratio of 54.8. This valuation metric aligns with Mizuho's cautious stance and may reflect the market's high expectations for future growth, which could be challenging to meet given the revised EV sales forecasts mentioned in the article.
It's worth noting that Tesla's revenue growth has slowed significantly, with InvestingPro data showing a revenue growth of just 1.37% over the last twelve months. This figure supports the concerns raised about potential softening in EV demand. On a positive note, Tesla remains profitable, with a gross profit of $16.89 billion over the same period, although its gross profit margin of 17.72% suggests some pressure on profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 21 additional tips for Tesla, providing a deeper understanding of the company's financial health and market position in these uncertain times for the EV industry.
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