Tesla (TSLA) shares fell Monday after Goldman Sachs cut its 2023 and 2024 earnings outlook for the global EV giant. It is expected that lower average sales prices will continue to put pressure on gross margins.
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Goldman Sachs analyst Mark Delaney on Monday lowered the company’s EPS estimates for Tesla for 2023 and 2024, telling investors that the EV company could cut vehicle prices in 2024 to keep volumes high. Delaney maintained a neutral rating on Tesla stock with a price target of 275, about 3% above where TSLA was trading Monday.
Tesla shares fell 3.3% to 265.28 in midday market trading on Monday.
The Goldman Sachs analyst cut fiscal 2023 earnings from $3.50 per share to $3.40 per share. For fiscal 2024, Delaney forecasts earnings per share of $4.65, down from his previous guidance of $4.75. Analysts agree that TSLA’s earnings will fall 17% to $3.36 per share in 2023, according to FactSet.
Chief Executive Officer Elon Musk and Tesla have cut car prices several times in 2023, sparking an electric car price war. Predictably, the strategy has eroded profit margins, pushing them below the company’s target ‘floor’.
Delaney wrote that his “expectation for short- to medium-term headwinds” is “neutralized by our positive view of Tesla’s industry leadership position and long-term growth potential.”
Meanwhile, Elon Musk on Monday called a Wall Street Journal article “completely untrue” on X, formerly Twitter. The WSJ reported Monday that the EV company is in early talks with Saudi Arabia to set up a manufacturing facility. According to the Wall Street Journal, the talks are at a very early stage and could fail.
Tesla shares
According to MarketSmith, Tesla shares have forged a new base with a good buy point at 299.29. Monday’s pullback — which found near-term support at the stock’s 10-day moving average — could be constructive after last week’s gains.
After taking nearly a month off from buying or selling Tesla stock, Cathie Wood and her company Ark Invest decided to offload more of their TSLA shares in back-to-back sessions, dumping more than 80,000 shares on Wednesday and Thursday .
TSLA stock hit resistance near the 50-day line in late August through early September. On September 11, shares rose 10% when Morgan Stanley analyst Adam Jonas raised his price target 60% to 400, citing potential huge profits from Tesla’s Dojo supercomputing efforts.
The move pushed Tesla stock above its 50-day line, with the August 31 high of 261.18 acting as an early entry for aggressive investors.
Tesla stock has a composite rating of 98 out of 99. Elon Musk’s Tesla also has a relative strength rating of 92. Tesla stock’s EPS rating is 93 out of 99.
Follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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