When Tesla shared its latest disappointing sales results, its investors cringed. Forecasts had previously been adjusted down by analysts from approximately 530,000 to 450,000 vehicles within the last year, anticipating a weak performance. Nevertheless, Tesla’s delivery numbers, reporting a mere 386,810 vehicles, even fell short of this tempered expectation. Investors were offered slight relief when share prices bounced back on Thursday following an all-time low for the year.
In the meantime, industry observers were shocked. Dan Ives, an analyst at Wedbush, described the situation as a catastrophic quarter that hit an impenetrable barrier and was something difficult to dismiss as a one-off setback. Despite being a long-standing optimist regarding Tesla, Ives confessed that if Tesla fails to pull through these tricky times, this could only be the beginning of an even bleaker phase in the firm’s history.
JPMorgan certainly concurs, suggesting that even the most positive investors should reassess their outlooks. It cut its price target for Tesla, currently trading around $175 (€162), to just $115 (€106). Despite a 60% drop from their peak, Tesla’s share prices remain “unduly high”.
This seems accurate given that Tesla remains valued at well above half a trillion dollars, and is trading at 54 times expected earnings. It comes as no surprise that investors are not eagerly anticipating Tesla’s earnings announcement in two weeks.