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How Elon Musk Can Turn Around ‘Trainwreck’ Q1

  • Elon Musk could turn the “Tesla wreckage into a brick wall,” said Dan Ives of Wedbush.
  • Tesla’s long-running bull market still sees upside potential for the automaker, despite an “extremely weak” first quarter.
  • But better days ahead will depend on Elon’s ability to reign in his distractions and regain control, Ives said.

Tesla may be able to turn things around after experiencing a “nightmare” first quarter, according to Wedbush’s Dan Ives.

The analyst and longtime Tesla bull pointed to the automaker’s dismal performance over the past three months, with the stock down 32% year-to-date and deliveries falling well short of expectations. This made the first quarter a “total disaster” for Tesla, Ives said in a recent note, also describing the last quarter as a “black eye” and “running into a brick wall” for Tesla.

“We’ve been here before. We’ve been through other disasters. But you have to call it what you see it. As far as the first quarter goes, it was just an extremely weak quarter,” Ives told BNN Bloomberg Wednesday.

But even if demand in China is weak, Tesla has plenty of positive long-term catalysts, Mr. Ives noted. The company appears poised to take as much as 20% of China’s electric vehicle market in the coming years. Tesla is also working to develop its fully autonomous driving technology, which could significantly boost its profits, according to some analysts.

That suggests there’s upside for Elon Musk’s automaker — assuming Musk can regain control of the company and rein in many of its “distractions,” Ives said, referring to recent events like Musk hinting he would move AI projects away from Tesla if he doesn’t get at least 25% control of the company. The CEO also said he would work to move Tesla’s incorporation to Texas from Delaware after its compensation package was struck down by a Delaware court.

“I think some of the distractions with Musk contributed to that,” Ives said.

Musk will need to commit to being Tesla’s CEO for at least three to five years, deploy a more concrete generative AI strategy and provide more advice on Tesla’s next models, he added, if the company wants to get through this difficult period.

“Either navigate through the turbulence – and I believe he can do that – but if not, this will be the start of what could be a probably darker chapter in Tesla’s history,” Ives said.

In a recent note, Wedbush maintained his “buy” rating on the stock and price target of $300, implying a 78% upside from the stock’s current levels. Other Wall Street analysts, however, have soured on their outlook for Tesla: Wells Fargo and JPMorgan recently lowered their ratings on the stock, warning of a 23% and 32% decline respectively.

businessinsider

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