On October 18, TSLA reported its Q3, 2023 resultys. The company posted EPS of $0.66 on revenue of $23.4-billion, below the $0.73 EPS and $24.1-billion topline consensus.
The analyst says it is clear that Tesla is not a software company, and that its preoccupation with AI is wrongheaded at this juncture.
“Tesla posted a large 3Q23 miss, largely as expected, with management pushing CyberTruck volume expectations into 2025 and delaying Mexico facility construction,” he said. “Management comments that Tesla has more than doubled computing power for all AI projects distracts from deteriorating execution. The crucial debate will be how much does Tesla need to cut prices to keep deliveries moving at an attractive rate in 2024. We see the 2.25M 2024 deliveries consensus as unachievable in nearly every scenario (up 25% over 1.8M targeted in 2023).”
In a research update to clients October 19, Irwin maintained his “Neutral” rating and one-year price target of $85.00 on TSLA.
The analyst thinks TSLA will earn $3.06 per share on revenue of $96.36-billion in fiscal 2023. He expects those numbers will improve to EPS of $3.71 on revenue of $115-billion the following year.
“Our Neutral rating deviates from the ROTH MKM standard rating system, and we believe the Neutral rating appropriately balances how Tesla is positioned to continue executing, but the shares are valued at an oversized premium to all peers in the automotive sector, in our view. The current market valuation appears to rest on the specious assumption that the hundreds of EVs slated for launch by 2025 will all be flops. Tesla does not operate in a vacuum,” Irwin added.