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Tesla’s stock is soaring after posting record quarterly delivery numbers and getting ongoing support from analysts, but not everyone on the street believes in the EV maker.
GLJ Research CEO Gordon Johnson told CNBC on Monday that he was not impressed with Tesla’s recent delivery numbers. The CEO has a price target of $ 67 for the shares of the EV leader.
Johnson argued that Tesla is “just growing”, despite “15 price cuts in the first quarter of this year” in its interview with Morgan Brennan of CNBC and Gene Munster of Loop Ventures.
The head of stock research said “year-on-year growth is irrelevant” at Tesla due to changing sales patterns and a Chinese launch and noted that the EV maker showed sequential growth of only 2% from the fourth quarter of the year past for the first quarter of this year.
According to Johnson, Tesla “chose the easiest fruit to enter the three largest automotive markets in the world, USA, China, Europe, and its sales grew by only 2% quarter on quarter, despite 15 price cuts in the first quarter of this year. year, 18 prices cut in total last year and another 52,500 capacity cars sold. “
Johnson also noted that Tesla sold “significantly less S and X cars with higher margins and model 3 and Y cars with significantly lower margins in the quarter”. According to the CEO, this could mean an impact of $ 300 to $ 500 million on the company’s financial results.
“So you are looking at a company, a high-growth company, which is barely growing, is losing more money from it and will see all of its credit sales disappear in the next year,” said Johnson. “We see this as a big problem.”
Johnson was referring to the tax credits that Tesla buyers receive for the purchase of an emission-free electric vehicle. The credits are expected to disappear in 2022, but some analysts believe President Joe Biden’s $ 2.3 trillion infrastructure plan will restore them before that happens.
Johnson also compared Tesla to Volkswagen in the interview, arguing that Tesla’s current assessment makes no sense in relation to its peers.
Tesla is valued at about $ 700 billion, despite having sold only 184,000 cars in the first quarter, while VW sells about 2.5 million cars per quarter and is valued at about $ 140 billion.
Some say Tesla’s assessment is based on its growth, but with the EV maker growing sales by just 2% sequentially, Johnson said he did not “know what people are talking about when they say this is transformational growth”.
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Gene Munster, founder of Loup Ventures, commented after Johnson’s argument and said he believes it is unfair to look at sequential growth due to the first quarter being a “seasonally light quarter”.
Munster said he believes competition is the biggest risk for Tesla, but as long as the “value of the car exceeds the competition”, Tesla will be able to “continue to have a measurable share of a total addressable massive market.”
Dan Ives of Wedbush released a note on Monday updating the Tesla to a “superior performance” rating and setting a target price of $ 1000 on the giant EV.
The analyst said he expects a credit of approximately “$ 10,000 to catalyze consumer demand for EV” in the future.