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On Wednesday, Guggenheim Securities adjusted its stance on Tesla (NASDAQ:TSLA) shares, reducing the price target to $170 from the previous $175, while reaffirming a Sell rating on the stock. The change reflects new forecasts for the electric vehicle maker’s first-quarter deliveries and margins, based on quarter-to-date data. According to InvestingPro data, Tesla’s stock has declined over 42% year-to-date, with a particularly sharp 17% drop in the past week. The stock currently trades at $230.58, significantly below its 52-week high of $488.54.
Guggenheim’s revised delivery forecast for the first quarter of 2025 now stands at 358,000 units, a significant decrease from the prior estimate of 405,000 and below the current consensus of 420,000. The firm points to the uncertainty in predicting March outcomes, as these hinge on the production of the refreshed Model Y and the potential discounts on older versions of the same model.
The firm also adjusted its expectations for Tesla’s first-quarter automotive gross margins excluding credits, setting them at 12.0% compared to the consensus of 13.6%. This estimate includes approximately 210 basis points of benefits from Full Self-Driving (FSD) features related to the Launch Edition Model Y and initial revenue recognition from FSD rollouts in China.
Guggenheim analysts have expressed concerns about the early demand indicators for the refreshed Model Y, citing modestly negative signs such as wait times in China and the lingering inventory of the older Model Y. Additionally, they noted the increasing frequency of TeslaTakeover Protests in the US and Europe, although they acknowledged that electric vehicle purchases are nearly equal among Republicans and Democrats.
The firm anticipates that Tesla’s headlines may worsen before improving, with potential negative impacts from the first-quarter delivery numbers, gross margin shortfalls, and new model launches that might not meet bullish expectations. The upcoming Robotaxi launch in June is also seen as a point of concern, with the possibility of it being less impactful than anticipated, especially as competitors like Waymo expand their services.
Guggenheim concluded that while there is excitement around robotaxis, the reality of Tesla’s financials is becoming increasingly critical. According to their analysis, Tesla has limited capacity to reduce prices further without risking a negative cash flow. This assessment has led to the lowered price target as the firm expects a continued negative trend for Tesla’s stock in the near term. Despite these concerns, InvestingPro analysis indicates Tesla maintains strong financial health with a current ratio of 2.02 and more cash than debt on its balance sheet. Subscribers to InvestingPro can access 20 additional key insights about Tesla, including detailed Fair Value analysis and comprehensive financial health scores, along with the in-depth Pro Research Report available for this prominent player in the automotive industry.
In other recent news, Tesla has faced a series of significant developments. Evercore ISI recently adjusted its price target for Tesla to $235, down from $270, while maintaining an In Line rating. The firm cited concerns about Tesla’s future deliveries and earnings, as well as skepticism regarding its autonomous vehicle technology. In contrast, Wedbush Securities reiterated its Outperform rating with a steadfast price target of $550, urging CEO Elon Musk to focus more on Tesla amidst various challenges. Additionally, Tesla announced plans to double its U.S. vehicle production over the next two years, as revealed by CEO Elon Musk during a joint appearance with President Donald Trump. This announcement comes amid ongoing protests against the company, which Trump labeled as acts of domestic terrorism. Meanwhile, Tesla led premarket gains among the Magnificent Seven stocks, rebounding after a significant drop earlier in the week. Despite these challenges, investor sentiment remains mixed, with some expressing hesitance to invest at current stock prices.
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