Tesla Orders ‘Most Critical’ To Share Price, Says Analyst

Tesla (NASDAQ: TSLA) shares tumbled Monday despite Berenberg upgrading the electric vehicle leader’s stock to Buy from Hold.

The Elon Musk-led company’s shares fell more than 6%, putting a halt to the recent stock price climb, which has seen it gain over 40% so far in 2023.

Berenberg analyst Adrian Yanoshik told investors in a note on Monday that he was upgrading Tesla to Buy from Hold, raising the price target to $200 from $255 as the company's price cuts represent an investment in growth.

The analyst stated it reflects the eclectic vehicle giant’s cost leadership strategy, and Berenberg believes Tesla's new plants offer a multi-year opportunity in capital and labor efficiency while ramping its battery cell production offers further economies of scale.

Berenberg expects Tesla to retain its gross and EBIT-margin lead over legacy car makers and views pricing concerns as “misguided.”

Elsewhere on Monday, Bernstein analysts said in a note that orders are “most critical” to Tesla stock.

Going forward, the firm believes strong orders point to the opportunity for Tesla to potentially raise prices, while weak orders will represent a need to reduce prices further, pressuring margins and possibly calling into question the bull thesis of strong share and margins over time.

However, Bernstein, who have an Underperform rating and a $150 price target on Tesla, acknowledged that Tesla appears to have created demand elasticity and that sentiment seems to be improving. They also state that the company's upcoming analyst day on March 1 could be a further positive catalyst.

Even so, the firm believes consensus numbers have not been reset adequately, and there is still further downside from Tesla's demand struggles. They also worry that the setup for the electric vehicle firm could be even more challenging in 2024.