Analysts at Wolfe Research outlined the key swing factors for Tesla's (NASDAQ:TSLA) stock in a note Monday, saying that the outlook has improved, but uncertainty remains.
New vehicle deliveries is one of the key swing factors, with Wolfe Research stating that despite management's commentary, they expect 2024 deliveries to be down compared to 2023 at around 1.75 million, or -2% year-over-year.
"Multiplying Q1 deliveries by 4 implies a run-rate of 1.55 MM units. We estimate seasonality (namely in China and NA) would boost that run-rate by ~65k," said the investment firm.
Cost reductions were cited as another key factor. The firm said Tesla is executing cost reductions very well in the first quarter.
Wolfe Research continues to expect a gradual ramp for the Cybertruck and has assumed 55,000 units for 2024 and 125,000 in 2025.
"Pricing should remain elevated though we don't see the vehicle reaching gross profit until later this year, when production ramps to ~125,000-unit run-rate," stated the firm. "And longer-term, Cybertruck profitability is likely to remain below that of TSLA's other products, given its much larger battery pack (123 kwh vs ~75 kwh for other vehicles) and a challenging manufacturing process."
Finally, operating expenses are expected to remain relatively flat in 2024 compared to last year, at around $7.8 billion, with the recently announced headcount reductions largely offsetting investments/operating costs tied to AI.
"While the outlook for Tesla does appear to have improved compared to a few weeks ago (when it appeared the company was going “all-in” on AI/Autonomy), there remains uncertainty in key areas," said analysts. They add that rising take rates, deployment of FSD in new markets (Europe and China), and initial deployment of robotaxi services are likely to be key proof-points.