Tesla delivered more cars than ever in 2022, but it still wasnt enough to meet its own lofty forecasts.
Elon Musks EV giant sent over 1.3 million cars to customers last yeara 40% year-over-year increase from 2021despite rising interest rates and persistent inflation. But Wedbushs tech analyst Dan Ives said that the company missed its 50% annual delivery growth target by a country mile on Tuesday.
Demand overall is starting to crack a bit for Tesla, the company will need to adjust and cut prices more especially in China which remains the key to the growth story, Ives wrote in a note. That remains the worry heading into a very cloudy 2023.
Demand issues and lofty forecasts
On Monday, Tesla reported 405,278 total vehicle deliveries in the fourth quarter compared to a consensus Wall Street estimate for roughly 420,000. The stock fell as much as 15% on Tuesday in response to the news, and is now down nearly 75% over the past 12 months.
Demand issues have left many Tesla investors worrying about the companys high valuation in the market.
Wall Street is expecting Tesla delivery growth in the 35%-40% range for 2023, which may be too high in the current economic environment, according to Ives. But the analyst remains confident that the company can turn things around and weather any potential recession, arguing that management just needs to reset investors expectations with more realistic delivery and financial targets for next year.
Musk & Co. need to lay out a more conservative number to hit in this jittery backdrop and rip the band-aid off guidance, he wrote.
Still, Iveswho has been one of Teslas biggest bulls for yearsrecently removed the company from Wedbushs Best Ideas List, a list of top stock market picks from analysts.
The Cinderella ride is over for Tesla and Musk now needs to navigate the company through this Category 5 dark macro storm, he said on Tuesday.
And with recession predictions from Wall Street underscoring the potential for reduced consumer spending in 2023, some analysts even argue Tesla stock could drop below $25 a share next year.
The bulls and the bears
Even the most bullish of analysts acknowledge that Tesla is facing short term demand issues and struggling to meet its optimistic forecasts, but Wall Street is split on the EV giants future prospects.
In the bulls camp, Ives holds a $175 price target on Tesla shares, representing a potential 60% plus share price jump next year. He argues that a lot of the recent bad news about deliveries is already priced into the stock, and that the electric vehicle boom is still in the early innings of a major growth cycle.
And CFRA Researchs senior equity analyst Garret Nelson reiterated his $225, 12-month price target for shares of Tesla on Tuesday.
After a difficult year for EV manufacturer equities such as Tesla, Lucid, and Rivian, we are bullish on TSLA in 2023, he wrote, noting that a stock buyback could be looming.
Nelson argues Teslas sales volumes will hit multiple new record highs in 2023 as the firms Austin and Berlin factories ramp up production, lower priced Teslas become eligible for federal EV tax credits, and the Cybertruck rolls out.
A higher valuation for the stock is justified by long-term growth expectations, he said.
But Gordon Johnson, CEO of GLJ Research, isnt so sure. Johnson, who is known as Teslas biggest bear, believes that rising competition and falling demand will cut Teslas stock price to under $25 per share by the end of next year.
He told Fortune that Teslas lead timesthe average time a customer waits to receive their vehiclehave been falling rapidly in recent months. Its one of the many signals that illustrate the companys growth has stalled, according to the analyst.
Their actual new orders were around 250,000 cars in the fourth quarter. Thats down quarter-over-quarter and down year-over-year, he said. Yet its valued as if its hyper growth. That is why the stock is imploding.
While Tesla bulls point to potential growth verticals for the company like robotics, semi-trucks, and self-driving potential saviors, Johnson said that he wouldnt trust Elon Musks promises.
He pointed to previous forecasts that havent panned outincluding when Musk said full-self driving cars would be ready in six months in 2017 and CyberTruck deliveries would begin in 2021 at the start of the pandemic.
Its just a car company that cant sell its capacity, Johnson said. Even the bearish analysts these networks have on are still way too bullish.
Tesla did not immediately respond to Fortunes request for comment. The company dissolved its PR department several years ago.
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