With a year-to-date loss of nearly 34%, Tesla (NASDAQ:TSLA) ranked as the poorest-performing stock in the S&P 500 Index ($SPX) until the conclusion of last week’s trading. Despite a recent uptick, investors haven’t found much relief, especially following Tesla’s disappointing Q1 delivery report. Is there hope for Tesla’s stock as it attempts to recover from its 52-week lows? Let’s delve into the discussion.
Tesla’s Troubling Q1 Delivery Report
Tesla’s Q1 delivery report left much to be desired, marking the first YoY decline in deliveries since 2020. This performance is quite unexpected for a company dubbed a growth juggernaut, with a CEO who forecasted a long-term delivery compound annual growth rate (CAGR) of 50%.
Although Tesla cautioned that its 2024 delivery growth might significantly lag behind the growth rate achieved in 2023, its Q1 performance failed to meet even conservative analyst expectations. Tesla attributed the decline in volumes partially to challenges in the production ramp-up of the updated Model 3 at its Fremont factory, along with factory shutdowns caused by shipping disruptions due to the Red Sea conflict and an arson attack at Gigafactory Berlin.
Despite these explanations, the substantial gap between Tesla’s production and deliveries signals a significant inventory buildup. The weaker-than-expected demand for electric cars has left companies grappling to sell cars to capacity.
Challenges Beyond Delivery Woes
Tesla faces additional hurdles, including an aging car lineup dominated by the Model 3 and Model Y. While the company initiated deliveries of the Cybertruck pickup model last year, mass production remains distant.
Moreover, although Elon Musk refuted reports of scrapping Tesla’s low-cost car project, delays in launching the model, particularly in China, where rival BYD (BYDDY) offers cars across multiple price points, may pose challenges.
Musk’s controversial behavior may also deter potential Tesla buyers. A survey by market intelligence firm Caliber revealed a decline in Tesla’s “consideration score” to 31% in February, plummeting from 70% in November 2021, when the firm started tracking Tesla.
Cathie Wood’s Support
Amid the gloomy outlook, Cathie Wood of ARK Invest, a prominent Tesla bull, bolstered her confidence in the company by purchasing more Tesla shares. Wood has set an optimistic base case 2027 target price of $2,000 on Tesla, with even her bear case target price at $1,400 and the bull case target price at $2,500.
According to ARK’s valuation model, Tesla’s robotaxi business is poised to contribute significantly to its future revenues, with 44% of 2027 revenues and 67% of the enterprise value expected to come from this segment.
Tesla’s Upcoming Robotaxi Unveiling
Musk recently announced Tesla’s plan to unveil its robotaxi on August 8. While this announcement boosted the stock, the market seems eager for concrete details about the robotaxi, especially considering Tesla’s history of missing self-imposed deadlines for full autonomy.
The Path Forward for Tesla
Tesla finds itself in a challenging position, with investor sentiment toward EV stocks souring and new growth ideas still a few years away. Musk emphasized during Tesla’s Q4 earnings call the importance of executing the company’s next growth wave driven by next-gen vehicles, energy storage, full self-driving, and other projects.
Moving forward, Tesla’s energy, autonomous driving, robotaxi, and AI products will play a pivotal role in compensating for slowing growth in its automotive business. Despite current headwinds, Wood remains bullish on Tesla, attributing most of its valuation to the software business and highlighting the lucrative opportunity presented by the global robotaxi market.
In conclusion, while Tesla may face volatility in the near term, Wood’s optimism suggests that the worst might be behind Tesla stock. These levels could present an attractive opportunity for long-term investors to accumulate TSLA shares.
Featured Image: Megapixl
Author Faith Yakubu 
