Barclays issued a cautious outlook for Tesla (NASDAQ:) in a note on Friday, maintaining an Equal-Weight rating and a price target of $180.
The main reasons for this stance relate to expected feeble supply numbers and ongoing fundamental challenges.
Barclays estimates Tesla’s Q2 2024 deliveries at ~415,000 units, well below the consensus estimate of 444,000. “We estimate Q2 deliveries at ~415K. pieces, below the current consensus of 444,000.” – analysts noted, attributing this to feeble sales in Europe and moderate production growth in China.
Despite another 7% gain, this still represents a year-over-year volume decline of approximately 11%, marking Tesla’s weakest quarterly year-over-year volume performance ever.
The company also noted potential inventory issues. “Production ~420 thousand units, which means further inventory expansion,” Barclays noted, expecting another modest inventory augment of around 5,000 units, bringing global Tesla inventories to around 150,000 units.
Moreover, Barclays sees further threats to Tesla’s profits. “Second quarter margin may hit novel low; “further negative EPS revisions lie ahead,” we read in the note. This followed a piercing decline in Q1 2024 deliveries, which came in at 387,000 units compared to expectations of 415,000-430,000 units.
Barclays also indicated that while Tesla’s strategic pivot toward autonomous vehicles and artificial intelligence has attracted market attention, feeble delivery performance could refocus investor attention on the technology’s rocky fundamentals.
“We believe Tesla is likely to face further negative estimate revisions for 2024 and 25,” Barclays concluded, underscoring its cautious stance on the stock.
