Benzinga - by Shanthi Rexaline, Benzinga Editor.
Electric vehicle giant Tesla, Inc.‘s (NASDAQ:TSLA) shares have been rangebound below the $200 level for much of this year, a far cry from its all-time high of $414.50 (intraday) reached on Nov. 4, 2021. A bullish analyst on Monday shared a few key catalysts that will pan out over the next two months and could prove to be stock-moving.
What Happened: As the stock languishes amid the company’s fundamental woes, Future Fund’s Gary Black listed the following events as key catalysts:
- June 13 Tesla shareholder meeting: The fate of CEO Elon Musk’s 2018 compensation package, which was invalidated by a Delaware Chancery court earlier this year and has since then been re-upped by the company’s board, will be decided at the meeting. The fund manager expects the proposal related to the recommendation to go through at the meeting and lift the cloud of uncertainty.
- Early July Q2 Deliveries Update: Tesla’s second-quarter deliveries update, likely due on July 2, may undershoot expectations, Black said. As opposed to the 4% year-over-year decline the consensus is modeling, he expects a steeper 10% drop. China’s weekly insurance registration data for Tesla vehicles will be key to gauging the strength of the quarterly sales number, he said.
- Second Quarter Earnings: Black expects second-quarter adjusted earnings per share to come in at 49 cents per share, well below the Street estimate of 58 cents per share. The tentative earnings schedule is July 17. The fund manager is also below consensus on second-quarter core auto gross margin, excluding regulatory credit, as he estimates the number at 15% versus Street’s 16.3%. He also looks ahead to an update on the sub-$30,000 EV from the company on the earnings call.
- Aug. 8 Robotaxi Event: While looking forward to the Robotaxi unveil as a catalyst, Black said Supervised full self-driving is not a catalyst. “Unsupervised FSD with TSLA accepting liability for injury/damage and a clear path for regulatory approval is positive,” he said.
Why It’s Important: The demand environment for EVs is unlikely to improve in the near term, given higher interest rates, which is one of the pushbacks, is likely to continue for some time. The Federal Reserve has shown no inclination to reverse its rate hikes until inflation cools back below its 2% target.
In China, Tesla is facing intensive pressure. The latest monthly sales report from domestic upstarts such as Nio, Inc. (NYSE:NIO) showed robust numbers as they have lock-stepped with Tesla’s price cuts and promotions. On top of it, they have diverse product offerings, catering to all market segments.
As Tesla continues with discounts and promotions, it remains to be seen whether margins will see any appreciable uplift.
The task before Tesla is now cut out. The company has to expeditiously roll out FSD in an unsupervised form, which is important for the launch of robotaxis as well as for raking in recurring high-margin revenue. But this appears easier said than done, given the mounting skepticism regarding the self-driving software package’s efficacy and safety and the regulatory hurdle. Alternatively, the company can woo ICE vehicle users with a low-end model from its stable,
In premarket trading on Tuesday, Tesla edged up 0.4% to $176.36, according to Benzinga Pro data.
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