The Reaction to Elon Musk’s ‘Master Plan 3’ Has Been Described as ‘Muted, at Best,’ Which Has Caused Tesla Stock To Drop Nearly 7%

Tesla Stock

Tesla Stock (NASDAQ:TSLA)

On Thursday, shares of Tesla Inc. (NASDAQ:TSLA) dropped nearly seven percent as investors continued to criticize the electric vehicle manufacturer for conducting an investor day that was light on data and did little to bridge the gap between bulls and bears in the market.

The price of Tesla stock (NASDAQ:TSLA) was projected to finish at its lowest level since February 3, when it closed at $189.98. This would mark the stock’s third consecutive session of losses.

During the electric vehicle manufacturer’s investors’ day, investors drove down Tesla share prices; however, Zacks Investment Research forecasts that the stock will increase by as much as 30 percent in as little as six months.

During the following six to twelve months, the company has set a price objective of $260. When compared to Wednesday’s closing price of $202.77, this price would indicate a 28% rise.

Late on Wednesday, Tesla held its first-ever investor day. During the event, the company teased a “next generation” electric vehicle platform but deferred queries regarding timing, looks, and production to a product event that has not yet been scheduled.

The majority of the allotted time for the presentation—which lasted for a total of four hours—was devoted to highlighting Tesla’s capabilities and discussing global objectives for electrification and sustainability.

Alex Potter from Piper Sandler stated that during the event, he spoke with several Tesla customers and came away from these interactions with the impression that “the ‘first blush’ response was subdued (at best), given a lack of specific information.”

“We also expected a bit more ‘meat on the bone,’” Potter added, despite the fact that a full-scale product unveiling was never in the cards.

Because of this, we, along with everyone else, were dissatisfied with the manner in which the corporation communicated the information. According to the analyst, “in this regard, we were neither shocked nor disappointed because it would have been out of character for (Tesla) to offer precise financial guidance.”

In a note that he published on Thursday, Wedbush analyst Dan Ives, who is well-known for being a Tesla bull, stated that the company’s story continues to be attractive.

“the scene is prepared for this car to be built and scaled internationally,” he claimed, despite the fact that there were no “particular specifics” regarding the less expensive next-generation Tesla vehicle, which is anticipated to be priced at less than $30,000 USD.

According to him, Tesla is still “at the top of the EV mountain,” whereas its competitors are only now beginning to climb the mountain.

Ben Kallo, an analyst at Baird Equity Research, is in agreement with the previous statement and thinks that Tesla is “many years ahead of the competition on numerous fronts.”

It has been stated that the corporation “has a clear goal and roadmap” to produce the next-generation electric vehicle, and it has been stated that the platform “is intended to increase product affordability, drive cost and efficiency improvements through innovation, and benefit from scale.”

Others continued to maintain their skepticism. Bernstein Toni Sacconaghi stated that the investor day was “heavy on vision, short on specifics.”

According to Sacconaghi, the strategy that Tesla is taking to the new vehicle, which is centered on “getting early design and production as locked in as possible,” may signal that it will take longer to bring the vehicle to market.

He said, “We do not believe that Tesla can deliver a low-cost product in volume before 2025, and believe that Tesla will need to decrease pricing in the interim to reach its growth ambitions over the next two years.” “We do not believe that Tesla can deliver a low-cost offering in volume before 2025.”

Sacconaghi stated that the occurrence simply provided evidence to support “the bull case” that Tesla possesses a structural cost advantage and will exploit it to attain an “unprecedented scale.”

He stated, “Although it is apparent that Tesla has a cost advantage compared to developed-market peers today, we expect that competitors will increasingly close the gap in cost.” “While it is undeniable that Tesla has a cost advantage compared to developed-market peers today,”

According to Jeffrey Osborne, an analyst with Cowen, the focus of investors will move to the company’s deliveries during the first quarter and whether or not Tesla’s price drops in January had an effect on demand.

It is anticipated that Tesla will publish the quarterly deliveries, which is a proxy for sales, around the beginning of April.

According to the results of a study conducted by FactSet, out of 46 analysts, 30 have a rating of overweight or buy for Tesla, 11 have a rating of hold, and five have a rating of underweight or sell.

In the past year, shares of Tesla have had a decline of almost 35%, whereas the S&P 500 index has experienced a decline of approximately 10%.

Featured Image: Unsplash @ Charlie Deets

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