04.22.23
Here we go again...
The Brilliant take of Adam Jonas.
Adam Jonas is a Brilliant Analyst from Morgan Stanley.
He has been covering Tesla for at least 6 years, some time with true passion, some time with a true Walstreet auto analyst skepticism.
He has been an angry bull in the early years until around 2017 through around $15 a share, turned into a skeptic bear with a Hold call since, with sell calls through 2020 beginning at $45 a share, slowly came back in the bull wagon after 2020 run at $145 a share and has been a very cautious bull since.
This week after Q1, Jonas dropped his Short term TSLA PT to $200 from $220.
He always has very unique predictions and conclusions.
He was the first, I think to ask Musk in 2015 about Future plans to compete with Uber through a ride sharing fleet.
He is the one who gave TSLA a bear short term PT of $0.7 when stock was around $15 (adjusted to splits), back in 2019, right before a 20 month x16 run that brought the stock to $288 in January 2021.
The reason for skepticism was Q1 2019 Deliveries and results. Those results drained all Bulls blood out of him and many others, and raised concerns that Competition is coming, the demand is falling, profitability is not within reach, etc.
That was the first Quarter after Tesla reached 200k cars sold in US, and there for lost the $7500 incentive.
Tesla up to December 2018, flooded the US market with 100% of their Model 3 so buyers can take advantage of the full rebate before it begins halving for 6 months, and halving again for 6 months and gone completely by end of 2019.
Q1 of 2019 was the first quarter Tesla sent the new Model 3 cars to Europe and China.
These shipments would take weeks to arrive and naturally caused a drop in deliveries and Sales.
Analysts seen the data and wrongly concluded, game is over.
Again, in March 2020, while it was obvious the Auto sector would suffer short and medium term from the close downs and uncertainty, Tesla as a company was quickly thriving and the stock was extremely hyped, especially after 6 years with pretty much no move from 2013 at $12 and again in 2019 at $12 (adjusted for splits).
This was due to demand that exceeded supply, and absolutely no meaningful EV competition in the West, Model Y introduced in March 2020, China factory coming on line in record time, Tesla dropping prices to $35k per model 3 for a while and small profitabily reached, in spite of the U.S rebate gone for Tesla.
Recently Jonas stated he believes the Cybertruck will only sell around 50k per year - a niche pickup, like the F150 Raptor trim.
I can't say enough how wrongfully his conclusions about Tesla are made, IMO.
Q1 2023 results presented, not surprisingly, a slow down in profitability climb and revenue per car drop. Tesla's well known aggressive price drops, which I discussed here already, are aligned with their long term goals, are inevitable following 2+ years of inflated price hikes, and facing a tough financial macro ahead.
Tesla is leading an inevitable trend that all must follow, they have no choice not to.
Jonas concludes wrongfully again, IMO, that this move by Tesla actually will cause Lagacy auto to slow down the transition effort to EV and therefore extend the ICE "money printing" machine a little longer.
He believes that by Tesla reducing pricing of the leading EV brand with the most demanded products and the most advanced and the most stable company financially and the one that is planning to grow 50% a year into the future, they are actually slowing down the EV transition.
I am sorry, this does not add up for me.
A company does not get to delay a disruption that is already taking place by refusing to play along, they just increase chances of being kicked out of the game.
I personally think by now, Legacy Auto knows that, and will not do what Jonas suspects, although they badly want to.
However, until this day, American and Japanese Legacy Auto chose to delay mass EV plans and dragged it for a very long time.
Ford delivered 100k EVs globally in 2022, 2.5%, when world average is 10%.
GM only sold 39k, 0.7%.
Toyota is distracted by Hybrid.
Maybe companies would love the governments to lay off, but it does not at all seem that way.
The IRA is forcing their hand to build Car and Battery factories quickly, they have no choice but to transition to EV as quickly as possible, no matter the financial pain involved.
https://twitter.com/SawyerMerritt/status/1649427047444279296?s=20
#Tesla #TSLA #AdamJonas
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