Jefferies analyst wants Elon Musk to abandon the Cybertruck
The long-term potential of the electric vehicle maker is hard to deny if you consider the company to be a technology play as well, but the near-term issues the company faces can't be denied.
Just how long can Tesla investors expect for the company's stock to be stuck in the mud? Analysts at Jefferies expect at least another year of tough times, according to a new bearish note from the ratings firm Monday.
"Tesla looks stuck in a slow lane for another 12-18 months, unable to capitalize on peer delays while European legacy OEMs launch $/€25k EVs next year and Chinese carmakers set a new pace of shorter product cycles," said analyst Philippe Houchois, according to Investing.com.
The firm lowered its Tesla price target to $210 per share from its previous level of $250 per share.
"We appreciate future value from FSD (including licensing) or Optimus, but not as near-term substitutes to solid core performance. As BEV penetration continues to grow globally, one of Tesla's long-term edge is to remain one of a handful of global low-cost producers (along with BYD, Stellantis (STLA) - Get Free Report, Toyata (TM) - Get Free Report."
But that future could be a long time away and the company needs to do something now in order to turn the tide in its favor. Houchois has a radical solution for the company.
"However unlikely just a few days before first deliveries, canceling Cybertruck would probably be positive for shares," Houchois wrote, according to Investors.com. "With 2024 already a lost year for growth, it would help Tesla refocus on an edge that was built on simplicity, scale and speed."
Houchois has reason to be pessimistic about the Cybertruck's prospects after the cautious tone Musk struck during the company's third-quarter earnings call.
"I just want to temper expectations for Cybertruck," Musk said, saying that there will be "enormous challenges" to reaching volume production with the vehicle. Eventually, Tesla expects to produce about 250,000 Cybertrucks a year, but that won't happen until 2025.
Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
Sign up for our e-News Alerts